The biggest auto recall in history just got bigger, and it is starting to look as if the financial pain might be spread around among all who were involved.
In 2013, Japanese supplier Takata announced that their airbags may have defective inflators and propellant devices, possibly causing the safety measures to deploy improperly in the event of an accident.
Since then, estimates suggest that as many as 34 million vehicles in the United States have been affected, according to Car and Driver. Another 7 million have been recalled in the rest of the world. Up to 15 deaths – including 10 in the U.S. – have been linked to these airbag troubles.
"The amount that Takata has to spend could ultimately determine the fate of the company."
These recalls have occurred gradually. First, only six car makes were part of the recall, the source reported, but many additional ones have followed – most notably Toyota, which put out the call for the Tundra, Corolla and Matrix from 2003-2004, among others.
Now, the time has come to determine who will be paying for the cost of the recall, and how much. Bloomberg reports that Takata and the affected automakers will soon hold talks, during which they will divide responsibility among themselves.
Though the total cost of the recall effort has not been officially determined yet, Takaki Nakanishi, an analyst for Jeffries Group LLC, believes it could be as high as $12.7 billion, according to Bloomberg.
The amount that Takata has to spend could ultimately determine the fate of the company, which has already seen its net income fall by 33 percent in the last quarter, Bloomberg reports. But even if the company stays afloat, its experience highlights the importance of subjecting crucial auto safety components to a vehicle testing service.