Honda Chastised Takata as Deadly Air Bag Crisis Unfolded

Updated on
  • Minutes of July 2009 meeting show automaker's frustration
  • `Why does it explode?' a Honda engineer asked Takata's CEO

Four months before U.S. regulators started their investigation, Honda Motor Co. executives sat down with Shigehisa Takada, the head of Takata Corp., to scold him for the way the manufacturer reacted to the crisis over its potentially deadly airbags, according to minutes of the meeting.

It seemed to be a rough session for Takada, the grandson of Takata’s founder. One Honda engineer asked if his company grasped the gravity of the situation, chiding the chief executive officer by saying he’d been too slow to act, the minutes show. The president of Honda’s North American manufacturing operations, Hidenobu Iwata, told Takada he was “constantly worrying” because the air-bag maker didn’t appear to have control of the situation.

The meeting, at Honda’s offices outside Los Angeles, took place in July 2009. In November, the National Highway Traffic Safety Administration opened its probe into Takata’s product, which contained a chemical propellant that according to regulators could explode with such force that it turned metal casings into shrapnel. Scores have been injured and perhaps nine dead, with a Pittsburgh-area teen killed in a July accident that NHTSA said Wednesday appears related. The U.S. earlier this year ordered a dozen automakers to replace Takata air bags in at least 19 million vehicles, the biggest safety recall in U.S. automotive history, which was expanded Wednesday to include hundreds of thousands more Hondas, Mazdas and Subarus.

Minutes of the meeting indicate the depth of frustration within Honda, which owns a 1.2 percent stake in Takata and had been its biggest customer. Honda is a defendant in most of the cases, and other automakers have also been sued.

“Honda was doing all they could to find out the cause and at every turn they were hamstrung and lied to,’’ said Ted Leopold, a lawyer representing a woman suing Takata in Jacksonville, Florida, who blames faulty air-bags for rendering her a quadriplegic after a fender bender. Leopold provided Bloomberg News with the minutes of the July 2009 meeting, along with other documents recently unsealed in the case.

Chemical Propellant

Revelations in the documents show Takata’s behavior “put Honda in the position of not being able to protect their customers,” Leopold said, “and threw their customers to the wolves.’’

Jared Levy, a spokesman for Takata, declined to comment on the documents or Leopold’s accusations, issuing a statement saying the company did provide data that was incomplete or inaccurate but adding that “expert analysis indicated that these testing issues are not the cause of the field ruptures of inflators.” The statement said the company is “committed to being part of the solution to the public safety concerns.” Tsutomu Nakamura, a spokesman for Honda, declined to comment before he can confirm the meeting took place.

Takata allegedly knew as early as 2004 about an issue with the chemical propellant in its bags’ inflators that could blow up the casing and throw shrapnel at a vehicle’s occupants. At the meeting outside Los Angeles, according to the minutes, a Honda engineer identified only as Otaka pressured Takata’s CEO, asking, “Why does it explode? I want to know the truth.”

Expressing Regret

Honda said in November that it was aware of evidence suggesting Takata had manipulated air-bag inflator test data and said it wouldn’t use the inflators in future models. Nissan Motor Co. and Toyota Motor Corp. have also stopped installing some Takata components.

At a press conference after Takata’s annual meeting six months ago, the CEO made his first public apology, saying, “I feel sorry our products hurt customers, despite the fact that we are a supplier of safety products.” He had earlier expressed regrets in written statements and newspaper advertisements.

Honda’s meeting with Takada came just after the automaker widened its recall for a second time. It first recalled nearly 4,000 Civics and Accords in November 2008. More cars, including some of its luxury Acura models, were added in June and July of 2009. Ultimately, Honda expanded its recall five times. Other automakers also started replacing Takata air bags.

NHTSA’s probe was opened in November 2009. A month later, the driver of a 2002 Honda Accord was killed in a crash in Virginia. U.S. regulators had to pressure Takata for information and to issue further recalls, with the company providing NHTSA and its own customers with “selective, incomplete or inaccurate information” about the dangers, according to the agency. Takata reached a consent decree with NHTSA that was announced Nov. 3, and agreed to pay a fine of as much as $200 million and hire an independent monitor who would report to the safety agency. NHTSA said in a statement on Wednesday that it selected John Buretta, a partner at Cravath, Swaine & Moore LLP, for the role.

An eighth U.S. fatality has been found, NHTSA said Wednesday. Honda, while saying it hasn’t had a chance to inspect the 2001 Accord coupe, said it had made several attempts from 2010 to 2012 to reach the previous owner to have the inflator replaced and mailed an additional notice to the current owner in July, one day before the accident. The company urged owners to get their vehicles repaired. So far a little more than a quarter of the faulty inflators in the U.S. have been replaced, NHTSA said.

Takata’s shares fell as much as 6.2 percent in Tokyo trading on Thursday, while the benchmark Topix Index was little changed.

Unsealed Documents

The documents unsealed in the Florida case include memoranda from Takata employees. In January 2005, an engineer named Bob Schubert wrote to an executive that the company was “prettying up” data sent to Honda about the air bags. At one point, Schubert wrote, the devices were said to have passed tests that never occurred. Referring to that instance, he wrote, “It has come to my attention that the practice has gone beyond all reasonable bounds and likely constitutes fraud.”

Leopold, the lawyer, is representing Patricia Mincey, 73, who he said has been a ventilator-dependent quadriplegic since an accident in her 2001 Honda Civic on June 15, 2014. Four days later, Mincey’s car was recalled. The case is set for trial in August in state court in Jacksonville. She is seeking punitive damages from Takata, alleging “intentional misconduct or, at the very least, gross negligence.” Honda settled its part of the case in a confidential agreement with the plaintiff.

Takata has been sued by drivers and passengers claiming its air bags caused shrapnel injures, and by those, including Mincey, contending the “dangerous’’ nature of the propellant in the bags can cause excessive-force deployments, often in low-speed collisions. Takata has settled most of the shrapnel cases but is contesting the excessive force claims, according to court records reviewed by Bloomberg.

— With assistance by Jennifer Surane, Jeff Green, Alan Levin, and Jie Ma

(Updates with Takata share price in 14th paragraph.)
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