* Largest auto recall in U.S. history
* Takata had previously resisted expanding the recalls
* Defect has been tied to six deaths worldwide
* Estimated cost of recall up to $5 billion – analyst
* Takata shares slide 10 pct in Tokyo
(Adds comment from Japanese carmakers, updates share prices,
By David Morgan and Ben Klayman
WASHINGTON/DETROIT, May 20 (Reuters) – Japanese air bag
manufacturer Takata Corp is doubling a recall of
potentially deadly air bags to nearly 34 million vehicles,
making it the largest automotive recall in American history,
U.S. safety regulators said on Tuesday.
The recall involves passenger- and driver-side air bag
inflators in vehicles made by 11 automakers, the U.S. Department
of Transportation, the National Highway Traffic Safety
Administration (NHTSA) and Takata said. It expands on the 16.6
million vehicles called back for repairs for the same issue in
previous regional and national recalls, and boosts the number of
vehicles affected globally since 2008 to more than 53 million.
Regulators linked six deaths worldwide to defective Takata
air bags which exploded too violently and shot shrapnel into the
Takata CEO Shigehisa Takada said in a statement: “We are
pleased to have reached this agreement with NHTSA, which
represents a clear path forward.” The company declined to say
whether markets outside the United States would be affected.
It was only under pressure from U.S. regulators that Takata
agreed to the expanded recall. It had previously resisted
expanding the recalls, saying the defect cited by automakers was
not “officially recognized.”
Toyota Motor Corp, Nissan Motor Co and
Honda Motor Co had expanded their Takata recalls over
the past week.
The automakers have said they decided to proceed with their
recalls after finding some Takata air bag inflators were not
sealed properly, allowing moisture to seep in to the propellant
casing. Moisture damages the propellant and can lead to an
inflator exploding with too much force.
The six deaths linked to the defective air bags have all
been in cars made by Honda, Takata’s biggest customer, which has
borne the brunt of the recalls to date.
Takata shares slid 10 percent on Wednesday to their lowest
in more than a month, and are down 46 percent since the recall
crisis worsened in late September. Honda shares ended flat.
Japanese carmakers and Takata said it will take them two
months to work through the data and decide how Takata’s U.S.
action might affect recalls worldwide. It is not immediately
clear how many vehicles are potentially involved in the recalls,
as cars with two air bags under recall could be double-counted.
NHTSA also cautioned that the U.S. numbers were preliminary
and subject to change.
U.S. Transportation Secretary Anthony Foxx said NHTSA also
issued a consent order to Takata, requiring the supplier to
cooperate in the safety agency’s probe as well as any oversight.
NHTSA also said it will “organize and prioritize the
replacement of defective Takata inflators” under its legal
authority. This is the first time the agency has used this power
since 2000, when Congress granted it under the TREAD Act.
“We will not stop our work until every air bag is replaced,”
‘OWNING UP TO THE CRISIS’
Foxx and NHTSA’s new administrator, Mark Rosekind, have been
aggressive in tackling auto safety issues. On Monday, NHTSA
escalated a regulatory battle with Fiat Chrysler Automobiles
, saying it could impose “multiple penalties” on the
automaker and order a public hearing to examine the automaker’s
handling of 20 recalls affecting more than 10 million vehicles.
NHTSA had slapped Takata in February with a $14,000 per-day
fine for failing to fully cooperate with a probe, but Rosekind
said that was now suspended.
Takata’s recall will cost the supplier and its automaker
customers an estimated $4-$5 billion, said Scott Upham,
president of Valient Market Research, which tracks the air bag
Takata has said it expects to return to profit this
financial year, but its chief financial officer told analysts
last week it would not set aside more cash to pay for the
Last November, sources told Reuters that bankers with
relationships with Takata were brainstorming financing
proposals, although not directly with the supplier. Raising new
capital could threaten the control of the Takada family, but
potentially boost governance and oversight.
The Takada family holds about 59 percent of the world’s
second-largest air bag inflator maker.
“TAKEN FAR TOO LONG”
A Honda spokesman had no immediate comment on how the
replacement air bag inflators will be produced for such a large
number of vehicles. Industry officials have turned to Takata’s
rivals for help in obtaining replacement parts.
Takada, whose family founded the supplier, said analysis of
the problem “was not within the scope of testing specifications”
set by its automaker customers.
“While it’s taken far too long, Takata finally seems to be
owning up to the air bag crisis that has plagued vehicles of all
shapes and sizes,” said Kelley Blue Book analyst Akshay Anand.
“A recall of this size is unprecedented in any industry.”
U.S. lawmakers, who had pushed for a broader recall,
welcomed the news.
“Folks shouldn’t have to drive around wondering if their air
bag is going to explode in their face,” Florida Democratic
Senator Bill Nelson said. “Let’s hope Takata’s admissions today
tell us the whole story.”
Takata faces multiple class actions in the United States and
Canada as well as a U.S. criminal investigation and a regulatory
probe. Tuesday’s announcement will “tremendously bolster our
claims,” said Peter Prieto of law firm Podhurst Orseck, who
leads the group of plaintiffs’ lawyers appointed to oversee the
U.S. cases. Those cases have been consolidated in federal court
(Additional reporting by Jessica Dye in New York, Radhika
Rukmangadhan in Bengaluru, and Chris Gallagher and William
Mallard in Tokyo; Editing by Simon Jennings, Matthew Lewis and