Quality, Safety and the Licence to Operate

On 13 January 2017 Takata, the Japanese maker of seatbelts and airbags, agreed in the federal court for the Eastern District of Michigan to plead guilty to one count of wire fraud and to pay $1 billion: a $25 million fine, a $125 million fund for people injured by its airbags and $850 million of restitution to the carmakers that had bought its inflators (Justice Department, reported). The same day an indictment was unsealed charging three former Takata executives, who were in Japan, with conspiring to falsify inflator test data given to the carmakers; no trial of any of them had been reported by late 2026, and they are presumed innocent unless convicted. The case did not turn on the defect itself. It turned on what Takata had told its customers about it: prosecutors said test results had been manipulated to make the inflators look better than they were.

The defect was in a process choice. From around the turn of the century, by the usual account, Takata's inflators, the small gas generators that fill an airbag in a few hundredths of a second, used phase-stabilised ammonium nitrate as their propellant. It was cheaper and more compact than the alternatives. Over years of heat, humidity and temperature cycling it could change in structure and burn too fast, so that the pressure burst the inflator's steel housing and threw metal fragments into the car (companion account). By 2019 the US recall had reached about 67 million inflators in about 42 million vehicles, the largest auto-safety recall in American history, across vehicle makers from Honda, Takata's largest customer, to Toyota, Nissan, BMW, Ford and General Motors (NHTSA, reported). By September 2024 the National Highway Traffic Safety Administration had confirmed 28 US deaths linked to ruptured Takata inflators, and the worldwide count was reported at at least 40.

The regulator had already acted. On 3 November 2015 NHTSA issued a consent order with a civil penalty of up to $200 million, $70 million of it in cash, a ban on new contracts for the propellant, a phase-out of its supply by the end of 2018 and an independent monitor; a separate Coordinated Remedy Order made Takata and 12 carmakers repair vehicles in order of risk, the hottest and most humid regions and the oldest cars first, because replacement inflators did not exist in the volumes needed (company, reported). Five months after the plea, on 25 June 2017, Takata's US arm filed for Chapter 11 in Delaware and the parent filed in Tokyo. Key Safety Systems of Michigan bought the healthy businesses for $1.588 billion, completing the purchase on 11 April 2018 and renaming itself Joyson Safety Systems; the liabilities for the propellant stayed behind (reported). A company that had supplied almost every carmaker ceased to exist because of a few cents of saving in a part that was meant to work once, in a crash, years after it was made.