Honda, carmakers say they may end up with most Takata costs

TOKYO — Carmakers may end up shouldering the bulk of the costs of replacing the estimated 100 million defective air bags made by Takata Corp.

Toyota Motor Corp, Honda Motor Co and Nissan Motor Co on Monday issued separate statements saying they may not be reimbursed for the majority of their recall-related claims by Takata, which earlier filed for bankruptcy protection in the US and Japan.

Seventeen vehicle makers including BMW and Tesla were named as unsecured creditors with unknown claims related to recalls and indemnification, according to Takata’s Chapter 11 bankruptcy filing, which listed more than $10 billion in liabilities. Takata is unable to disclose the exact total of its liabilities as the company hasn’t reached an agreement on how to split the recall costs with the automakers, Nobuaki Kobayashi, a member of the steering committee, said at a news conference on Monday.

Tokyo-based Takata also announced an agreement on a sale to Key Safety Systems for ¥175 billion ($1.6 billion). The US air-bag maker owned by China’s Ningbo Joyson Electronic Corp will substantially retain all of Takata’s employees worldwide and the acquisition of the businesses and bankruptcy proceedings are expected to be completed by the first quarter of 2018.

“It’s a lot, but from an accounting point of view, Japanese automakers already recognised those air-bag related expenses in prior years,” said Tatsuo Yoshida, an automotive analyst at Tokyo-based Sawakami Asset Management. Following the bankruptcy filings, automakers “unwillingly will have to absorb the difference” between the money Takata receives and the outstanding recall costs, he said.

The recalls will eventually cover more than 120 million inflators worldwide, Scott Caudill, chief operating officer for US unit TK Holdings, said in a court document.

Toyota may not recover as much as ¥570 billion of known recall-related costs from Takata, it said in a statement. Nissan said it was unlikely to be reimbursed by Takata for recall costs in most cases, without giving a monetary figure. The Yokohama, Japan-based company booked a one-time, pretax expense of ¥90 billion during the 2015 financial year for potential recall costs.

Honda said it’ll become difficult to recoup the majority of its claims against Takata with the bankruptcy filing. The automaker set aside ¥556 billion for Takatarelated recall costs in the two years to March 2016.