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Will Takata Avoid Paying for The Airbag Inflator Recall?

September 28, 2016
Colson Hicks Eidson

The federal government has finally had enough of Takata’s delay tactics. The National Highway Traffic Safety Administration (NHTSA) has ordered the Japanese auto parts maker to recall all of its ammonium nitrate airbag inflators that do not contain a drying agent (known as a “desiccant”). This has been a massive blow to the company, considering that its current inflator recall is already the largest in history. Now more analysts are starting to wonder, how is Takata going to pay for this recall?

Will Takata Avoid Paying for The Airbag Inflator Recall?

We have talked about Takata’s plan to pay for the recall before. It involves the airbag manufacturer relying on automakers to foot most of the bill while the company makes replacement parts. However, demand is so high that Takata has to cooperate with its competitors to produce more replacement parts faster. With this final expansion underway, Takata has now reached the worst-case scenario, and its alliances with automakers might be breaking down.

Takata has begun talks with several automakers about splitting the costs of this recall. These negotiations are partially fueled by a German report released in July. The report doesn’t specify if Takata is more responsible for the defect than the automakers, which could give the company stronger footing for negotiations. This is good news for Takata, because it could allow them to take on a smaller financial burden.

Takata is floundering at the moment. Its income has fallen 33 percent from this point last year, and despite the company’s rosy projections, experts expect it to take another loss at the end of this fiscal year. The company’s also restructuring, trying to find a buyer, and its CEO is stepping down. If negotiations with automakers goes south, Takata may come to the end of the line very soon.

Will Takata be able to survive this recall? Will the company survive long enough to fulfill this recall? Will automakers bail the company out? Keep following our defective auto parts blog to find out, and tell our automotive defect attorneys what you think on our Twitter and Facebook pages.