November 27, 2014 2:23 pm
Toyota Motor Corp said it has launched a global vehicle recall in order to change the potentially dangerous air bags produced by Takata Corp.
The Japanese car manufacturer said it would pull back around 57 000 vehicles equipped with Takata-made airbags, as safety issues related to ruptured air bag inflators are far from over.
Since 2008 more than 16 million vehicles have been recalled due to the faulty air bag inflator, which may explode and burst metal fragments into the car. Last week Honda Motor Co also launched a car recall over the same problem.
Toyota said it has no knowledge of any injuries or deaths linked to the recall, which includes its Vitz cars, also known as Yaris in some markets, and RAV4 crossover models made between December 2002 and March 2004. Around 40 000 of the recalled vehicles are in Japan, 6 000 in Europe and the remaining 11 000 are located outside of North America.
Daihatsu Motor Co, a subsidiary of Toyota, also launched a recall in Japan, including 27 571 Mira cars constructed between December 2002 and May 2003 for the same reason. According to Japan’s transport ministry official around 2.6 million vehicles have been pulled back due to concerns over air bag safety.
The National Highway Traffic Safety Administration has given Takata until December 2 to launch a recall that finds a defect in the “driver’s side air-bag inflators and is nationwide in scope.” If the company does not comply, the NHTSA may force a recall and issue civil fines of up to $7 000 per violation.
“Takata has provided no justification for limiting the geographic scope to the high absolute humidity region” said Frank Boris, head of NHTSA’s Office of Defects Investigation.
Shintaro Niimura analyst at Nomura Credit Research, said that US recall driver-side costs could go up to ¥70 billion, he also warned that Takata could need almost ¥200 billion of reserves in the event of a US nationwide recall that includes passenger-side air bags.
“If the company makes any missteps, we cannot say that there is ‘zero’ chance of the company dying a sudden death – that is, being hit with excessive debt or facing a cash-insolvency bankruptcy” Mr. Niimura said.
Toyota Motor Corp lost 0.46% on Wednesday and closed at ¥7 147 in Tokyo, marking a one-year increase of 13.09%. The company is valued at ¥24.54 trillion. According to the Financial Times, the 25 analysts offering 12-month price targets for Toyota Motor Corp have a median target of ¥8 200, with a high estimate of ¥9 400 and a low estimate of ¥7 000. The median estimate represents a 14.73% increase from the last price of ¥7 147.