Exploding air bags lead to $70 million fine

Takata may have to recall all its inflators

A U.S. auto safety regulator fined Japan’s Takata Corp. $70 million for concealing evidence of defective air bags.

Exploding Takata air bags are linked to eight deaths and more than 100 injuries worldwide. Under the five-year agreement, NHTSA can increase the penalty to a record $200 million if the company fails to abide by the terms.

Read: 1.5 million Canadian vehicles affected by Takata recall

The company admitted it knew for years the inflators were defective but fended off recalls by failing to tell the NHTSA.

“Delay, misdirection and refusal to acknowledge the truth allowed a serious problem to become a massive crisis,” Transportation Secretary Anthony Foxx said.

In a statement, CEO Shigehisa Takada said the company regrets the circumstances that led to the NHTSA agreement and will work to develop a new generation of inflators. He said the settlement will “enable us to focus on rebuilding the trust of automakers, regulators and the driving public.”

Takata’s air bags inflate when ammonium nitrate expands, and investigators have found prolonged exposure to airborne moisture can cause the propellant to burn too fast. That can blow apart a metal canister and shoot out fragments. So far, about 23.4 million driver’s-side and passenger-side inflators have been recalled on 19.2 million U.S. vehicles sold by 12 automakers.

Most of those injured or killed lived in high-humidity states along the Gulf of Mexico. The injuries included severe neck cuts and facial injuries, as well as the loss of eyesight and hearing.

Read: Takata CEO apologizes for air bag defects, reveals little about underlying cause

Takata and government investigators have yet to discover the exact cause of the ruptures. The Department of Transportation is giving Takata three to four years to prove all of its inflators are safe or to identify the cause of the ruptures.

“Unless new evidence emerges, the company will have to recall all of its inflators,” even those in car models not implicated up to now, Foxx said. He said he was unsure how many air bags that would amount to.

NHTSA Administrator Mark Rosekind said Takata’s misconduct dates to at least 2009, when it failed to report the problem. Automakers must notify NHTSA of defects within five days of discovering them.

Regulators said Takata also provided them with “selective, incomplete or inaccurate data” for years.

Kelley Blue Book senior analyst Rebecca Lindland said Takata has a long ways to go and must find the problem’s root cause.

She said it was too early to declare Takata as finished because it makes a variety of products, such as seat belts and steering wheels, as long as it responds properly, going forward.

“I don’t know if it’s enough to take the company down,” she said in a telephone interview. “I think they will weather the storm, but they need to come clean.”

Read: Frustrated by recall epidemic, Americans are less satisfied with cars than any time since 2004

All reported air bag-related deaths have been in Honda vehicles but the automaker hasn’t ruled out using other Takata products, including air bags minus the inflators.

Sen. Bill Nelson of Florida, where numerous air bag ruptures have been reported, said he is worried that Takata will be able to sell ammonium nitrate inflators until the end of 2018. “We urgently need to redouble efforts to get the recalled vehicles fixed and get the old ammonium nitrate-based inflators out.”

The agreement also calls for the appointment of an independent monitor who will make sure Takata abides by its terms.

Takata still faces hundreds of lawsuits and a federal criminal investigation.

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