Airbag recalls prompts Takata to book $440 million special loss in quarter ended June

Article by Christian Andrei, on July 22, 2014

Takata Corp. will book JPY45 billion ($440 million) in extraordinary loss in the quarter ended June 2014 following recalls issued by a number of carmakers over potential issues with its airbags. Honda Motor Co., Toyota Motor Corp., BMW AG and a number of carmakers have issued recalls of millions of vehicles to fix Takata airbags that may explode and shoot out shrapnel.

The vehicles were mostly located in places where there is high humidity. The cost of the recalls is expected to hike once the National Highway Traffic and Safety Adminstration discovers proof that driving in high humidity could hike the risk of the airbags exploding, or once carmakers move to expand the recalls beyond certain states in the US.

According to Takata, it is still reviewing the possible effect of the special loss on its full-year financial forecast. Takata is expecting to log JPY16 billion in net profit for the year ending March 2015.

In the year ended March 2013, Takata took a $300-million charge and logged a JPY21.1 billion in net losses after carmakers issued recalls of around 4 million vehicles globally over passenger-side airbags.

For the past five years, over 12 million vehicles have been called back by several carmakers due to potential issue with Takata air bags.

Topics: takata, airbag, recall

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