Bankruptcy of Airbag Maker

Long having failed in appropriate response to broad criticisms, Japanese car parts maker, Takata, filed bankruptcy to Tokyo Regional Court on Monday. According to Tokyo Shoko Research, the total amount of Takata’s debt was ¥1.7 trillion, marking it as the greatest bankruptcy of a manufacturer in post-war Japan. There still remain a huge number of cars, each of those is installed wrongly equipped airbag.

Established as a fabric maker in Hikone, Shiga, in 1933, Takata expanded its business in producing car parts like airbag or seat belt along with steep growth of Japanese carmakers. In 2009, there happened a car accident in United States, in which the driver was killed by explosion of airbag made by Takata. It was found that the airbag did not work correctly at collision of the car and splashed debris of metal covering the airbag with a great explosion, which was caused by heat and humidity for a long time. The victims of Takata airbag rose to eleven in U.S.

Takata was lazy in responding to those consecutive accidents of its products. In November 2015, U.S. National Highway Traffic Safety Administration posed Takata penalty of $200 billion on its negligence in necessary recalling or disclosure of information. Takata’s greatest client, Honda, announced that it would not install Takata airbag in new models, deteriorating financial balance of Takata.

Takata protested the request of carmakers to recall the airbags, arguing that the reason of the accidents had not been specified. After struggle with Takata seeking responsibility with car sales, carmakers had to “investigate” the cars with Takata airbag in all over U.S. Nevertheless, Takata finally had to accept its recall and apologized in June 2015.

Tokyo Stock Market decided to remove Takata from its list and Takata’s debenture amounting ¥30 billion turned to be defaulted. The company is going to proceed to a process of rebuilding with help of U.S. car parts maker, Key Safety Systems, that will buy whole business of Takata with ¥175 billion. The transfer of business will be done by the first quarter of 2018.

It is concerned how quickly Takata will collect dysfunctional airbags having spread to the world. Only 36% of owners of the cars with Takata airbag have responded to the recall. Even how a driver is careful, Takata airbag will explode, possibly killing him or her. The parts for replacement is still in short. Delay of recall may affect the business of carmakers. Total impact has not determined yet.