U.S. fines Takata, bans volatile chemical in its air bags

The top U.S. auto safety regulator on Tuesday imposed a relatively modest $70-million fine on air-bag supplier Takata Corp (7312.T) and ordered it to stop making inflators that use ammonium nitrate.

The National Highway Traffic Safety Administration cited the chemical as a factor in explosive air-bag ruptures that caused seven deaths and nearly 100 injuries in the United States.

NHTSA said millions of cars equipped with potentially defective Takata air bags may not be repaired until the end of 2019 because not enough replacement parts are available.

In an unusual move, Honda Motor Co (7267.T) said it was "deeply troubled" by evidence suggesting Takata "misrepresented and manipulated test data for certain air bag inflators." Honda was Takata's largest air-bag customer.

NHTSA, which is part of the U.S. Department of Transportation, accused Takata of providing "selective, incomplete or inaccurate data" from 2009 to the present.

Takata said it was committed to phasing out the use of ammonium nitrate in its inflators by the end of 2018. Its American depositary receipts closed down more than 4 percent.

In a briefing, U.S. Transportation Secretary Anthony Foxx said NHTSA had "taken Takata from being in a kicking-and-screaming mode to being part of the solution."

Honda said it provided NHTSA with information from "millions of pages of Takata internal documents" that the Japanese supplier produced in connection with U.S. lawsuits.

The automaker said it had recalled 6.3 million U.S. vehicles and replaced inflators on more than 40 percent of them. Honda also said it no longer would use Takata inflators in front air bags in its future vehicles. Takata said it would pay the $70 million fine in six installments through October 2020. NHTSA said another $130 million would be due if the company does not comply or if the agency uncovers additional violations of safety regulations.

The potential total fine of $200 million is more than the $130 million that NHTSA levied earlier this year on Fiat Chrysler Automobiles (FCAU.N)(FCHA.MI) but is dwarfed by much higher penalties from other agencies.

The U.S. Environmental Protection Agency, for example, has said Volkswagen AG (VOWG_p.DE) is potentially liable for billions of dollars in fines for installing illegal software on nearly 500,000 U.S. diesel models since 2009.

Democratic Senators Edward Markey and Richard Blumenthal on Tuesday renewed their call for Congress to remove the ceiling on penalties that NHTSA can levy. Safety advocate Clarence Ditlow called for the imposition of criminal penalties.

NHTSA said 12 automakers had recalled 19 million vehicles with more than 23 million potentially defective inflators. Foxx said millions of unrecalled vehicles could still be on the road with inflators that use ammonium nitrate, a compound that can become unstable when exposed to moisture.

"We have enough suspicion about this substance to believe there is risk to the consumer," Foxx said. "And until (Takata) can prove that it's safe, we will not see ammonium nitrate in these air bags in the future."

NHTSA also said it might take four more years for manufacturers to come up with enough replacement inflators for the vehicles that already have been recalled.

The agency ordered carmakers to accelerate repairs on "high-risk" inflators, including those in humid areas, and to have enough replacement parts on hand for them by June 2016.

Tags

ammonium nitrate, NHTSA, Takata, Honda, Anthony Foxx, Richard Blumenthal, Edward Markey

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