Takata Corp. admitted guilt this Monday on the federal court as part of a billion settlement. This will include establishing compensation funds for automakers and victims of its faulty airbag inflators. U.S. vehicle owners also filed the complaints against Honda Motor Co., Nissan Motor Co., BMW AG, Ford Motor Co., Mazda Motor Corp. and other automakers, with accusation that they knew about the defective Takata inflators for years but kept using them. At least 16 deaths have been linked to exploding Takata inflators. The defects have led 10 automakers to recall more than 31 million cars worldwide since 2008. All but one of the deaths have occurred in Honda vehicles.
The automakers could face costs to replace all the defective airbags that would be 5, 6 or 9 times the $850 million set aside in the fund, and total replacement cost could be more than $7.6 billion. Yoichiro Nomura, Takata’s chief financial officer, said after he formally accepted the plea: “I would like to sincerely apologize on behalf of Takata,” he said.
Takata is seeking financial backers as it faces potentially billions of dollars in recall-associated costs
It has not identified what company has been selected by a steering committee leading that process. Key Safety Systems, a Chinese-owned auto supplier, is the leading candidate, people familiar with the process said in early February. A person briefed on the matter told Reuters on Monday a decision may be reached by the end of March. Takata has denied investor speculation that it would have to seek some form of bankruptcy protection in the United States or Japan. However, during the court hearing, Judge Steeh and lawyers for the Justice Department alluded to the potential for Takata to collapse if it could not find a buyer.
As part of the agreement with U.S. authorities, Takata has agreed to pay a $25 million fine and has 30 days to pay the $125 million for victim compensation. Takata has up to a year to deliver the remaining $850 million for automaker compensation. If a financial backer takes control of Takata, however, the money for the automakers must be delivered within five days. Reuters had reported in November that Takata may file for bankruptcy as part of a restructuring.
It is not still decided who should manage the compensation funds after considering proposals from potential candidates. Takata will be on probation and under the oversight of an independent monitor for three years, and has agreed to make significant reforms in the way it handles safety issues. The Justice Department has demanded similar oversight to resolve the investigations into mishandling of auto safety problems at GM and Toyota.