Defective airbag inflators lead to steep fines for Takata

The recall of more than 30 million vehicles just in our country alone is enough to grab anyone's attention, especially if the automotive part associated with this recall has been linked to hundreds of injuries and at least eight deaths so far. What the ongoing recall of Takata airbags illustrates is a worst-case-scenario for manufacturers and the true cost of negligence for businesses across the nation.

For those of our Florida readers who have not heard yet, Takata, the maker of the defective airbag, was recently fined by the National Highway Traffic Safety Administration for violating "several provisions of the Motor Vehicle Safety act and the Federal regulations implementing the Act, including requirements that it notify NHTSA within a reasonable time (five days) of when it determined, or should have determined, the existence of a discovery of a defect," explains an NHTSA fact sheet.

For its missteps, the NHTSA issued a consent order to Takata, ordering it to immediately pay a $70 million penalty. In addition to the cash fine, the federal agency is also holding Takata to terms laid out by the consent order. If the company fails to meet the agency's requirements, such as phasing out the dangerous propellant responsible for making the airbags defective, then the NHTSA will fine Takata an additional $130 million in civil penalties. The total, some reports indicate, would be the largest civil penalty ever imposed by the agency.

Facing litigation for defective products is challenging for companies that rely on the sale of their goods for revenue. Litigation can easily tarnish a business' reputation, causing it to lose customers and revenue as a result. Takata, for example, was dropped by Honda earlier this month with Toyota following suit days later. Losing major auto makers like these two could end up hurting Takata even more than the civil penalties, though only time will tell.

Sources: The New York Times, "Honda Drops Takata as U.S. Issues Huge Fine Over Airbags," Hiroko Tabuchi and Danielle Ivory, Nov. 3, 2015

The New York Times, "Toyota to Drop Takata as Supplier of Airbag Inflaters," Jonathan Soble, Nov. 6, 2015