Takata plunges 20% on ‘worst case’ airbag recall costs of $24 bn

Takata’s shares plunged 20% in Tokyo on Wednesday, after Bloomberg News said the embattled Japanese airbag supplier’s recall-related costs could come in as high as $24 billion. Bloomberg said the company estimated the “worst case” scenario would involve the recall of 287.5 million airbag inflators at a cost of 2.7 trillion yen ($24 billion). Takata and its clients are still hashing out how the costs would be shared, the source said.

It is not difficult to imagine how hard it will be for Takata to rebuild its financial standing if the expenses are apportioned.

Takaki Nakanishi, an analyst with Jefferies

The whopping estimate comes as Takata struggles to deal with the inflator defect that can cause airbags to deploy with explosive force. This sends metal and plastic shrapnel hurtling toward drivers and passengers – in some cases killing them or causing grisly injuries. At least ten deaths have been linked to the airbag ruptures and some 50 million Takata airbags have been recalled globally, including some 28 million in the United States. In February, a report by a coalition of the world’s leading carmakers, concluded the chemical used to inflate Takata airbags can be unstable, especially in hot and humid conditions.

Takata