Photo: Mercedes-Benz
Daimler has announced that it will set aside roughly 500 million euros (approx. $560 million) to handle the recall for defective Takata airbags. The German company will spend around $560 million to replace the potentially defective Takata airbags fitted in its vehicles.
Daimler estimates that this provision “in the mid-hundreds of million euros” made in the financial year 2016 will not affect earnings of the ongoing business.
The corporation has decided to report it separately, while the negative cash flow impact of the measure will be “minor” for 2016. Daimler AG assumes that the EBIT of the group will increase slightly this year in spite of the provision.
While Daimler announced it would recall 840,000 vehicles because of the initial Takata situation, the German company will have to add more cars to that number after the NHTSA discovered that Takata’s problems are larger than expected. We are talking about a total of 33.8 million vehicles equipped with defective airbags from Takata.
NHTSA already estimates that the recall of all the defective airbags supplied by Takata “could take years,” but the situation does not get any better through new updates. In the case of Daimler, the number of additional vehicles that need to be fixed is not known at this time, and the press release does not mention any figures.
However, we do know that Takata must replace between 35 and 40 million airbag inflators in the USA and Canada. The defective components have been found not to have a drying agent. Because of the lack of the solvent, these inflators may get damaged upon activation, and the occupants might be injured or even killed by metallic and plastic fragments fired along with the airbag’s inflator.
Takata airbags have caused issues for multiple automakers, as the Japanese supplier had contracts with numerous brands. According to previous press releases, 14 automakers have repaired 24 million vehicles that were sold in the USA with defective airbag inflators built by Takata. Some of these cars might have to come back to dealerships for the replacement of passenger-side airbag inflators.
The corporation has decided to report it separately, while the negative cash flow impact of the measure will be “minor” for 2016. Daimler AG assumes that the EBIT of the group will increase slightly this year in spite of the provision.
While Daimler announced it would recall 840,000 vehicles because of the initial Takata situation, the German company will have to add more cars to that number after the NHTSA discovered that Takata’s problems are larger than expected. We are talking about a total of 33.8 million vehicles equipped with defective airbags from Takata.
NHTSA already estimates that the recall of all the defective airbags supplied by Takata “could take years,” but the situation does not get any better through new updates. In the case of Daimler, the number of additional vehicles that need to be fixed is not known at this time, and the press release does not mention any figures.
However, we do know that Takata must replace between 35 and 40 million airbag inflators in the USA and Canada. The defective components have been found not to have a drying agent. Because of the lack of the solvent, these inflators may get damaged upon activation, and the occupants might be injured or even killed by metallic and plastic fragments fired along with the airbag’s inflator.
Takata airbags have caused issues for multiple automakers, as the Japanese supplier had contracts with numerous brands. According to previous press releases, 14 automakers have repaired 24 million vehicles that were sold in the USA with defective airbag inflators built by Takata. Some of these cars might have to come back to dealerships for the replacement of passenger-side airbag inflators.
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