Japanese company Takata is facing huge losses per year due to the air bag recall scenario.
Takata has warned about a loss of about 13 billion yen which is equal to $120 million due to the recall of air bags from all over the world. These annual losses have exceeded the annual profit amount that was $5 billion for last year, according to BusinessInsider. This is really troubling for the financial status of the company.
Around 50 million air bags of the company have been recalled globally due to the lesser security they provide during an accident. The Takata air bags that were pretty famous previously have reported to be proven less efficient in a car accident. In US, the transport authorities have recalled about 40 million air bags that are being used in cars.
The reports have suggested that the inflators have the ability to inflate violently resulting in facial injuries. It was also discovered that it was responsible of releasing shrapnel in various cars during the infatuation process. These air bags have supposed to cause 11 deaths in accidents along with 100 injuries only United States of America.
The loss that Takata will have to face is not a lot as compared to the profit made by company in past. However the ongoing recall can lead the company into peril if things are not settled financially. If Takata is found guilty of putting less secure air bags in cars then it will have to pay for all the losses. This will take a toll on the company. Along with that the company might be sued according to U.S laws.
These recalls will surely lead to lesser confidence in Takata products by Automobile industries. These days many famous car companies are using Takata’s air bags and other accessories. However if the situation is not settled, then Takata might lose its clients.