Takata goes bankrupt with flawed air bags still on road

TOM KRISHER, DEE-ANN DURBIN AND MARI YAMAGUCHI

Takata’s lethally defective air bags proved to be the company’s undoing Monday. But it could take years to get the dangerous devices off the road in the U.S. and around the world.

Crushed by lawsuits, fines and recall costs, the Japanese auto parts supplier filed for bankruptcy in Tokyo and Delaware and will sell most of its assets for $1.6 billion to a rival company. A small part of Takata will continue to manufacture replacements for the faulty air bag inflators.

The problem, though, is that 100 million of the Takata inflators worldwide have been recalled, 69 million in the U.S. alone in the biggest automotive recall in American history. It will take the industry years to produce that many replacements.

In the meantime, millions of car owners are forced to wait nervously for someone to fix a problem blamed for at least 16 grisly deaths worldwide, 11 of them in the United States. Many owners have been put on waiting lists by their dealers until the parts arrive.

“The big problem is the air bags are still out there. They’re like bombs waiting to explode,” said Billie-Marie Morrison, the lawyer for a young Las Vegas woman grievously injured by an exploding air bag in March.

In fact, the last batch of U.S. repairs is not scheduled to begin until September 2020, according to the National Highway Traffic Safety Administration, which is overseeing the recall.

“I don’t think I have any options,” lamented Marv Muller, the owner of a 2009 Subaru Impreza. “It’s really bad.”

Muller, a recruiter in New York, received a letter in January saying his car needed to have its passenger air bag repaired. He contacted a Subaru dealer, only to be told it didn’t have the parts.

He was put on a waiting list and told he would have his car repaired in June. It hasn’t happened yet.

In the U.S., more than 16 million inflators have been repaired so far, or 38 percent of the total. In Japan, 70 percent have been replaced, according to Takata. That’s partly because Japan won’t renew vehicle registrations unless recalls have been completed.

Because of the type of chemical propellant used by Takata, the defective air bags can inflate with too much force and spew deadly shrapnel at drivers and passengers. Takata sold the inflators to 19 automakers, including Toyota, Subaru, BMW, Honda, Ford and Nissan.

Takata’s bankruptcy filing clears the way for most of its assets to be taken over by Key Safety Systems, a Chineseowned company based in suburban Detroit.

Takata President Shigehisa Takada said that with the company rapidly losing value, filing for bankruptcy was the only way it could carry on.

“We’re in a very difficult situation, and we had to find ways to keep supplying our products,” Takada said.

Victims and their families fear the bankruptcy filing could mean there will be little money left over to compensate them. Earlier this year, Takata pleaded guilty to federal fraud charges and agreed to pay $1billion for concealing the defect for years. The penalties include $850 million in restitution to automakers, $125 million for victims and families and a $25 million criminal fine.

“Filing for bankruptcy is going to protect Takata financially, but it’s not going to protect drivers who have been injured or are going to be injured,” Morrison said.

Morrison’s 19-year-old client Karina Dorado was injured when the air bag in her 2002 Honda Accord deployed during an otherwise minor crash. Morrison said Dorado underwent several operations to repair neck and vocal cord injuries, but her voice will never sound the same.

Dorado’s car was found to have a defective Takata air bag that had been taken from another vehicle.

Lawmakers say the U.S. government needs to do a better job of ensuring the vehicles are fixed.

In a statement, NHTSA said it has been assured by Takata that the bankruptcy won’t disrupt the flow of repair parts.

The safety agency is also making sure older cars are fixed first, since the chemical Takata used in the air bags, ammonium nitrate, degrades over time, especially in hot, humid climates.