Takata seeks US bankruptcy protection after air-bag recalls
Monday, June 26, 2017
Takata Corp filed for bankruptcy in the US, more than eight years after initial recalls involving its defective air bags spiralled int
o the biggest safety crisis in automotive history.
[TOKYO] Takata Corp filed for bankruptcy in the US, more than eight years after initial recalls involving its defective air bags spiralled into the biggest safety crisis in automotive history.
The Tokyo-based supplier filed for Chapter 11 bankruptcy in Delaware, listing more than US$10 billion in liabilities, according to court filings. Takata entered the bankruptcy filing with a plan to sell the company.
Key Safety Systems Inc, a US air-bag maker, is set to take over Takata for about 180 billion yen (S$2.22 billion), people familiar with the matter have said.
Shares and bonds of Takata - whose products are used by carmakers including Honda Motor Co and Ford Motor Co - have slumped as investors anticipated an imminent bankruptcy filing by the manufacturer of faulty air-bag inflators linked to at least 17 deaths worldwide.
In the US alone, about 43 million air bags inflators are currently subject to recall, and only about 38 per cent have been repaired as of May 26, according to data on the US Department of Transportation's National Highway Traffic Safety Administration's website.
In Japan, the recall affects close to 19 million vehicles and is 73 per cent complete, a spokesman at the country's transport ministry said this month.
The challenges for Takata's acquirer will be manifold. The Japanese parts maker posted its third-straight annual loss even without including the full costs of repairing millions of air bags, which automakers are now paying for. It will have to stem an exodus of talent at Takata, even as it works to regain trust and demonstrate to automakers the process won't result in disruption of supplies.
Japan Credit Rating Agency on June 20 cut Takata's credit rating to the lowest level before default citing the increasing likelihood that the component maker will file for bankruptcy protection.
Even so, Key Safety, the world's fourth-largest air-bag maker bought by Ningbo Joyson last year, would gain greater access to Japanese automakers and the combined entity would pull closer in market share to leader Autoliv Inc.
Takata's biggest customer Honda first started recalling Accord and Civic models in 2008 to replace the supplier's air bags. The company's air-bag inflators used ammonium nitrate as a propellant that can be rendered unstable after long-term exposure to heat and humidity, leading them to rupture and spray metal shards at vehicle occupants. More than a dozen other automakers including Volkswagen AG, Toyota Motor Corp and General Motors Co have also recalled vehicles fitted with the Japanese company's devices.
In January, Takata admitted to hiding the deadly risks of its exploding air bags for about 15 years in an agreement to pay US$1 billion to US regulators, consumers and carmakers. Auto manufacturers including Toyota, Subaru Corp, Mazda Motor Corp and BMW AG reached settlements worth US$553 million to resolve economic-loss claims tied to the air-bag recalls.
Takata, founded by the Takada family in the 1930s as a textile maker, produced parachutes for the Imperial Japanese Army during World War II. In 1960, it started manufacturing seat belts for local automakers, which were leading the country's industrial expansion.A few years later, Honda asked Takata to look into manufacturing air bags.
Juichiro Takada, who had taken over from his father and company founder Takezo Takada in 1974, initially hesitated. Air bags deploy in controlled explosions, and he judged the risks of making them to be too great.
Eventually though, Takada relented. By 1989, air bags had become standard in all US cars. And in 1990, Takata produced its first air bag. In the early 2000s, Takata started using ammonium nitrate as propellant.
The parts maker went public in 2006, with the Takada family and trust retaining a majority stake. Shigehisa Takada, 51, took over the reins of the company when his father died in 2011. As recall followed recall, he apologised in written statements and newspaper ads, but he didn't make a public apology until June 2015, after the annual shareholder meeting.
Given the tone of the very seriously written acknowledgment letter (which you can read in full here) that Demon buyers will be forced to sign in front of a notary just to place an order, it seems Fiat Chrysler and its legal defense team have some similar issues. The letter was revealed Wednesday on Allpar.com, the FCA-centric website.
As I did to much wailing and gnashing of teeth in April, I still take great issue with the nearly treadless Nitto drag radials that come standard on the $86,090 Challenger SRT Demon. Their lack of tread make them extremely dangerous in wet and cold conditions, and I suggested that making the drag radials a $1 option or even traditionally treaded street tires a $1 option was an easy -- though admittedly less profitable -- fix.
Funny thing: In the acknowledgment letter, Demon customers are warned that the "Drag tires are not recommended for driving in wet weather conditions where there is a risk of hydroplaning." They are also told, sternly, that "Customer shall not move the vehicle in temperatures below 15 degrees (Fahrenheit) with the Drag Tires. In temperatures below 15? F, the Drag Tires can lose flexibility and that may lead to cracking and other tire damage."
So you can't move the Demon below 15 degrees? Has anybody considered that this car is scheduled to be built over the winter? In Canada?
And speaking of those problematic tires, better not take them on the highway, the letter warns: "They are not intended for highway use, as the expected miles of wear from the racing compound is greatly reduced."
I also took issue with the Demon's launch control, suggesting that it was unconscionable to allow consumers to instantaneously engage the system, potentially unleashing the Demon's full horsepower every time they pull up next to a Corvette or a Tesla. As an alternative, I suggested a two-minute delay before the launch control would be fully engaged, which would make it harder for amateurs to endanger the motoring public every time their manhoods were challenged at a stoplight.
Funny thing: The acknowledgment letter also forces the Demon buyer to agree that he or she will "never use any 'Track-Use' features, functions, equipment or parts on public roads or any other prohibited area. The intended use of 'Track-Use' features, functions, equipment or parts is for race vehicles on race tracks."
Dodge's acknowledgment letter for the Demon also goes to great lengths to make sure that the potential customer, "their personal representatives and heirs and next of kin" (I have a feeling "next of kin" is going to be used a lot more than people want to accept) understand the Demon's power and potential for personal destruction. To order a Demon, the customer must agree that he or she "assumes all risk" and waives "any and all claims against FCA US LLC and/or Dealer."
Of course, the letter is absolutely silent about what happens when the Demon is sold used to a second legal owner.
When I was pulling into a parking spot, moving slowly, the car suddenly surged forward, jumped the curb and flattened a parking sign. One moment the car was in the parking space and the next it was up on the grass.
There's no way that a driver pulling into a parking spot would ever use the amount of force it would have taken to jam the gas pedal down enough to cause the car to do that, if it would even be possible.
I've seen a lot of information on the Internet about Honda and sudden acceleration. The dealer said there is nothing from Honda stating a known problem in the 2017 HR-V.
MADISON, Wis. — For the first time, an automobile company has conceded that a software glitch in electronic control units could cause cars to accelerate suddenly, forcing drivers to scramble to take emergency measures to prevent an accident. Honda Motor Co., citing software problems, announced Thursday that it is recalling 175,000 hybrid vehicles in Japan.
Honda revealed that some hybrid versions of its Fit and Vezel subcompacts could suddenly accelerate without warning.
A Honda spokesman in Tokyo told Bloomberg that unintended acceleration incidents have caused property damage, but no injuries or deaths thus far. The recall affects only vehicles that were sold in Japan.
Anthony Anderson, a UK electrical engineering consultant, told EE Times, "To the best of my knowledge, this recall is the first occasion on which any car manufacturer has admitted publicly to a link between a software malfunction and sudden acceleration and issued a recall to fix the software."
Not coincidentally, Toyota Motor Corp. is busy settling several hundred lawsuits contending that its vehicles inadvertently accelerated. The carmaker has never acknowledged the software issue. Instead, it blamed dozens of injuries and deaths on loose floor mats, sticky accelerator pedals, and driver error.
The only time Toyota's defective software faced public scrutiny occurred in last fall's Bookout v Toyota Motor Corp. trial. An Oklahoma County jury found Toyota liable for a crash and awarded $1.5 million of compensation to the driver, Jean Bookout, who was injured in the crash, and $1.5 million to the family of a passenger, Barbara Schwarz, who died.
After the jury verdict, Toyota Motor Corp. reached a confidential settlement with the victims to avoid punitive damages.
"Honda, by acknowledging its mistakes, is much more likely to survive than companies that push problems under the floormat and claim that the problems do not exist," Anderson said.
— Junko Yoshida, Chief International Correspondent, EE Times
TL* THE CONTACT OWNED A 2017 HONDA HR-V. WHILE REVERSING AT AN UNKNOWN SPEED, THE VEHICLE ACCELERATED INDEPENDENTLY ONTO A PEDESTRIAN WALKWAY WITHOUT WARNING AND COLLIDED WITH THREE VEHICLES. THERE WERE NO INJURIES AND A POLICE REPORT WAS NOT FILED. THE VEHICLE WAS LATER TOWED TO A DEALER TO HAVE THE DATA BOX INFORMATION REMOVED, BUT THE DEALER REFUSED SINCE THE VEHICLE WAS DEEMED A TOTAL LOSS. THE MANUFACTURER LATER AUTHORIZED THE DEALER TO COMPLY WITH THE DATA REMOVAL. THE FAILURE MILEAGE WAS 2,342.
COA finds firetrucks bought from China defective June 23, 2017
MANILA, June 23 -- The Commission on Audit(COA) found some firetrucks procured from China as defective, which could affect the capability of the country’s regions to efficiently respond to emergency cases and effectively carry out Bureau of Fire Protection's (BFP) mission to prevent and suppress destructive fires.
The COA Report ending in December 31,2016 also noted some irregularities in the PHP 2.577 billion procurement deal by the BFP entered with a Filipino-Chinese joint venture in 2015.
The COA Report stated that 37 percent, or 176 out of the 469 firetrucks delivered by the joint venture of Kolonwel Trading, the local partner, and Hubei Jiangnan Special Automobile Company Ltd. of China were defective.
The contract was for the supply of 244 firetruck units with 1,000-gallon capacity at PHP 6 million each and 225 units with 500-gallon capacity at PHP 5 million each with the objective of achieving a set of reliable, fast and efficient fire trucks.
The Report stated this objective did not materialize as viewed from the various defects noted in the 176 (or 37 per cent) out of the 469 fire trucks delivered in 2015.
According to the Report, a total of 39 defects in the 176 firetrucks ranging from simple faults such as damaged side mirrors, busted front and rear lights to the more serious ones such as “engine shuts-off even during operation,” “sudden unintended swerving specially at running state” and “sudden acceleration of engine.”
It was on Feb. 2, 2015 when the BFP executed with Kolonwel joint venture the purchase contract amounting PHP2,577,275,000.
This was after the BFP Bids and Awards Committee in October 2014 post-disqualified the two other bidders for supposedly being “unresponsive” or failing to meet some technical requirements and as of May 9, 2017, it showed 107 of the trucks still needed to be repaired by the supplier.
The Audit Team Leaders (ATLs) of the BFP Regional Offices 1, 6 and 11 issued AOMs (Audit Observation Memorandum) on reported noted defects in the fire trucks and observed that the defects would affect the capability of the end-user Regions to efficiently respond to emergency cases and effectively carry out BFP’s mission to prevent and suppress destructive fires, the Report stated.
The COA questioned BFP's choice of supplier, noting that Kolonwel Trading, the Filipino majority partner in the joint venture had “questionable 60 percent Filipino ownership/interest.”
The Report revealed that under their agreement, the parties should contribute PHP 100 million as initial funding requirement of the JV (joint venture) whereby Kolonwel should put up PHP 60 million, or 60 percent, COA noted.
The audit body noted that Kolonwel's declared assets only amounted to PHP 1.4 million in 2012 and PHP 1.6 million in 2013. Thus, it is highly unlikely that it can put up the PHP 60 million initial funding share agreed upon in its joint venture agreement with Chinese firm Hubei.
Considering Kolonwel Trading’s assets in CYs 2012 and 2013,the financial capability to contribute the PHP 60 million to the JV was highly questionable. This casted doubt the 60 percent Filipino interest in the JV, affecting its eligibility to participate in the public bidding.
In the report it was noted that the quality evaluation of the delivered firetrucks was done in haste with BFP failing to collect penalties from the joint venture for the delays in the delivery of the units and other violations in the contract.
The audit body noted that the the BFP's decision to buy cheaper models instead of units of higher price but of proven better quality.
The delivery of the defective firetrucks could have been prevented had there been “judicious and meticulous planning” on the part of the BFP, it said. (PR/PNA)
Crash victims file $95 million suit against Kia Corp.
Posted on Friday, April 28, 2017
The parents of twin brothers who died from a Dec. 31, 2015, collision on Dinah Shore Boulevard are suing the car corporation they deem responsible for $95 million.
Coffee County residents Aaron Hill and his wife, Lynetta Hill, have filed the lawsuit in U.S. District Court Eastern District of Tennessee on grounds Kia Motors and its parent group, Hyundai-Kia Automotive, are responsible for what occurred on New Year’s Eve more than a year ago.
They are seeking $35 million in compensatory damages and $60 million in punitive damages.
The lawsuit stems from the collision that claimed the lives of 7-year-old twin brothers John and James Hill.
It says that as a “direct and proximate result of the defendants’ negligence, Aaron Hill and Lynetta Hill sustained serious and permanent bodily injuries and emotional and mental injuries,” and their minor children were fatally injured.
When the collision occurred, the Hills were stopped at the red light in Winchester at the Dinah Shore Boulevard-Bypass Road intersection facing south. The twin boys were in the back seat.
Without warning, from behind, the Hill family’s minivan was hit with such force, the rear end of the minivan was collapsed practically into the front seat. The wreckage flew across the intersection as the minivan spun 360 degrees at least once and hit the front of the truck.
The vehicle that hit the Hill’s minivan, a tan 2008 Kia, was driven by 83-year-old Mary Parks. Her passenger, Jimmie Northcutt, another older woman, was riding in the back seat.
Witnesses said they saw the Kia speeding erratically south on the Boulevard moments before it slammed into the Hill’s vehicle. The front end of the Kia was nearly non-existent due to the force with which it hit. It did not appear that brakes had been applied at all.
The speedometer in the Kia had frozen at 90 miles an hour due to the impact, police reports said.
James died shortly after the impact. John was airlifted to Nashville’s Vanderbilt University Medical Center and later passed away.
Aaron was also taken away from the scene in critical condition, and Lynetta had to be pulled from the wreckage once the police, fire and rescue crews could pry the door open wide enough to safely reach her.
In the Kia, Ms. Parks’ leg was mangled. She and Northcutt were rushed to the hospital. Ms. Parks passed away later.
The lawsuit says Kia Motors and Hyundai-Kia Automotive Group “failed to discharge their duty to issue warnings prior to the sale of the vehicle.”
It says the defendants were aware that the product was defective or unreasonably dangerous before it was sold, and the corporation failed to take reasonable steps to warn potential buyers of the “defective or unreasonably dangerous condition of the vehicle.”
The lawsuit says the 2008 Kia Optima model is defective because it had an inadequate fault detection system that could not “anticipate foreseeable unwanted outcomes, including unintended acceleration.”
It also says that the electronic throttle control system and its components are highly susceptible to malfunction caused by various electronic failures, including faulty circuit boards, short circuits, software glitches and electromagnetic interference from sources outside the vehicle.
The lawsuit also says that the car model lacks a brake override system, meaning that the driver is unable to stop or slow the engine during a sudden unintended acceleration incident by stepping on the brakes.
It says the defendants could have easily implemented a brake override system years ago that would have prevented sudden unintended acceleration incidents, regardless of the cause.
The lawsuit says that from at least 2002, the defendants knew or should have known that the electronic throttle control systems should have included a brake override system.
“The defendants are strictly liable for the damages to the plaintiffs as a result of the design, manufacture and distribution of the subject defective 2008 Kia Optima,” the lawsuit says.
Kia says in its response that Kia Motors of America, based in California, “denies that the subject vehicle suddenly and unexpectedly accelerated out of control… KMA avers that when the subject vehicle was designed, manufactured and sold, it conformed with the state of scientific and technological knowledge available to its manufacturer.”
Kerikeri woman Carolyn Fox, at the site on Kerikeri Rd where she stopped her Toyota Blade after it accelerated unexpectedly.
A Kerikeri woman had to put both feet on her brake pedal after her car accelerated to 100kmh by itself.
Carolyn Fox was driving her 2007 Toyota Blade G Hatch - purchased from Northland Toyota in Whangarei - on July 2, 2016 on Kerikeri Rd to the Bay of Islands Airport when the vehicle accelerated unexpectedly from 60kmh to 100km.
After considering her options, she applied both feet to the brake pedal and pushed down as hard as she could.
Toyota disputes that there is a fault and maintains it was probably caused by an unsecured floor mat, but a disputes tribunal adjudicator has ruled in favour Fox.
The Motor Vehicles Disputes Tribunal decision resulted in Fox being awarded the purchase price of her car and part of the mechanical warranty after two instances of the car accelerating unexpectedly.
The adjudicator's report stated: "However although the nature of the fault remains unknown, having excluded driver error as the cause, I am satisfied that the unintended acceleration was caused by an undiagnosed fault with the vehicle."
Northland Toyota chief executive Bryce Woodward says Toyota NZ currently have the vehicle.
"We are confident it is fault free. It is not currently available for sale."
Despite the tribunal ruling that an undiagnosed fault was likely the cause of the unintended acceleration, Woodward says they stand by their conclusion that an unsecured floor mat in the driver side foot well was likely the cause.
Fox said the vehicle travelled two kilometres from the initial "unintended acceleration". When the car came to a stop she put the vehicle into neutral before switching the engine off.
Fox restarted the car and continued through the Kerikeri Rd roundabout towards the airport. Upon exiting the roundabout the vehicle again accelerated unexpectedly, and she immediately put both feet on the brake and put the vehicle into neutral.
She then continued onto the airport, experiencing no further problems.
Fox returned the vehicle on August 3 2016, which Northland Toyota refused to accept. Before the tribunal hearing, Northland Toyota offered to refund the purchase price, which Fox declined.
"It's an independent legal ruling that there is something else wrong with the car, besides the possibility of driver error or the floor mat being the reason for the unintended acceleration," Fox says.
"The reason why I risked losing the case, was to have the ability to speak publicly with the backing of the court's ruling, because Toyota were consistently minimising the cause of the unintended acceleration."
Fox says all drivers should be told to secure their floor mats and how to stop a car that's accelerating unexpectedly.
"Just put it into neutral, nothing else is going to safely stop the car."