Takata CEO Said Prepared to Resign Amid Crisis; Shares Riseby and
Air bags made by Takata behind biggest U.S. safety recall
Takata's shares have declined 60 percent in the past year
Takata Corp. Chief Executive Officer Shigehisa Takada is prepared to resign in order to placate stakeholders unhappy with the way the air-bag supplier is handling the crisis involving its defective products, according to a person familiar with the matter.
The president stepping down is the only way to enlist the support of automakers and lenders, according to the person, who asked not to be identified because the information isn’t public. Takada, 49, doesn’t intend to resign “at this time,” the company said in a filing with the Tokyo Stock Exchange after meeting with automakers today.
“He should have resigned a year ago,” said Scott Upham, an analyst at Valient Market Research. “Why heads haven’t rolled as a result of this is beyond me. They need someone to pull them out of the fire, and I don’t see anybody internally who has the business acumen to do it.”
The company met with carmakers Friday to discuss the status of Takata’s business, Hideyuki Matsumoto, a company spokesman, said by phone. He declined to comment further or make Takada available for an interview.
Takata surged 11 percent to 661 yen at the close in Tokyo. The shares have plunged 79 percent in the last two years.
Management for the supplier of air bags, seat belts and steering wheels is under pressure from major stakeholders including Honda Motor Co. to step down over the biggest U.S. auto-safety recall, people familiar with the matter have said. Automakers that were invited to meet the supplier Friday will be more receptive to supporting Takata if management takes responsibility for the recalls and resigns, they said.
Takata needs to find the root cause of the air-bag defect as soon as possible and take measures to supply replacement parts for recalls, Tetsuo Iwamura, a Honda executive vice president said Friday in Tokyo. The carmaker reported net income of 124.2 billion yen ($1 billion) in the quarter through December, missing the 149.3 billion yen average of eight analysts’ estimates compiled by Bloomberg.
Frustrations have been rising as automakers approach the eight-year mark since Honda, which owns a 1.2 percent stake in Takata, first recalled vehicles with air bag inflators that are prone to deploy with too much force, spraying metal and plastic shards at drivers and passengers. The crisis deepened this week, with the company reporting an 11th death potentially linked to the defect. About 100 people have been injured in the U.S. alone.
Ford Motor Co. is among Takata customers adding to recalls that have already cost automakers about 600 billion yen to 700 billion yen, a person familiar with the matter said earlier this week. Takata, Honda and a consortium of automakers in the U.S. including Toyota Motor Corp. are backing investigations into the root cause of the air bag ruptures. Those efforts will determine how much of the recall costs Takata will end up being on the hook for repaying customers.
Before a fatal accident in a 2006 Ford Ranger in December prompted more recalls this month, automakers had already recalled about 19 million vehicles in the U.S. Takata reached an agreement with its U.S. regulator in November to pay at least $70 million in fines, fire some employees and phase out the chemical propellant in its air-bag inflators that has been linked to the failures. If the company violates the accord, it will be subject to fines totaling as much as $200 million, which would be the largest civil penalty by the National Highway Traffic Safety Administration.
Takata has already made an attempt to shake up management in the midst of the air-bag crisis. The company hired former Robert Bosch GmbH executive Stefan Stocker in 2013 and made him president, with Takada becoming chairman. Takada resumed the role of president and replaced Stocker late the following year.
Takada’s grandfather Takezo founded the company in 1933. Takezo’s son Juichiro expanded the longtime maker of seat belts into a broader supplier of safety equipment. It entered the air-bag business at the behest of Honda and has built the components since the 1980s.
Reuters earlier reported that Takata is preparing the ground for the exit of its chief executive.