Automakers fight massive airbag recall that may cost $10 billion (2024)

By Keith Laing | Bloomberg

Carmakers are lobbying against an extraordinary push by US regulators to force a recall of as many as 52 million air-bag inflators.

Companies like General Motors Co. and Ford Motor Co. said in letters to the National Highway Traffic Safety Administration released Wednesday that there’s no proof that the parts made by ARC Automotive Inc. are defective, despite reports that some inflators have exploded in a crash, injuring or killing passengers.

NHTSA is calling for a broad recall over ARC’s objections, a move that may cost carmakers up to $10 billion.

Despite the objection from ARC and multiple automakers, NHTSA continues to march ahead with the steps required for it to take unilateral action. The comment period ended Monday and the agency will make a final decision on whether the parts are defective as early as next year, according to a person familiar with its thinking. That would be the last step before a mandatory recall, although ARC could challenge the decision in court.

GM said in comments posted online by NHTSA it disagrees with the agency’s initial decision that the ARC airbags are defective, which it said “falls far short of the agency’s technical and procedural standards, especially in major defects enforcement cases.”

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GM said it has already “voluntarily recalled over one million ARC air bag inflators.” The company said NHTSA’s recall could extend to “as much as 15% of the over 300 million registered motor vehicles in the United States,” and that the agency had failed to demonstrate that this “is legally required or would advance public safety.”

Ford also said “serious concerns” about the scope of the recall, which would impact more than two million vehicles the firm manufactured between 2005 and 2017, the Dearborn company said: “Within those millions of Ford vehicles, there have been zero reported ruptures of ARC Inflators in the field.”

Billions to fix

“I would guess that we’re looking at around $10 billion for replacement of 50 million airbags” with ARC inflators, Brooks said.

Knoxville, Tennessee-based ARC didn’t reply to requests for comment. The company has been cooperating with NHTSA’s investigation since 2015 and it said in its response posted online Wednesday that “strongly disagrees” with the need for a massive recall.

ARC said NHTSA was not basing its current position on objective technical or engineering conclusions despite “an eight-year investigation involving numerous vehicle manufacturers and suppliers; dozens of information requests,” meetings with suppliers, or field recovery and tests.

Rosemary Shahan, president of the Sacramento, California-based Consumers for Auto Reliability and Safety group, said an aggressive stance against ARC’s parts is appropriate “because it appears clear they are defective and pose an unreasonable risk to safety — the legal standard for triggering a safety recall.”

The agency said in May it had identified at least seven cases of ruptured airbags that led to injuries, including two deaths, dating from 2009 to as recently as this past March. Regulators believe welding performed in the manufacturing of ARC inflators may have left debris inside the part. During a crash, gas produced by ignition is supposed to fill up the bag. But when the channel is clogged, it can cause excess pressure to build up inside the inflator and potentially spray metal fragments.

Brooks expects the agency to force a recall unless there’s a negotiation or settlement in the next few weeks.

NHTSA is often criticized by consumer-safety groups as being too cozy with auto companies and moving too slowly to regulate them before faulty parts cause fatalities, especially when companies offer to fix problems with over-the-air software updates instead of a recall.

NHTSA declined to comment on the prior criticisms and the ARC case.

Takata precedent

Mark Rosekind, who oversaw the Takata crisis as head of NHTSA during the Obama administration, said the current investigation looks like “déjà vu all over again.” More than 100 million defective air bag inflators made by the now-defunct Takata cost billions of dollars and forced that company into bankruptcy.

“Unless ARC can bring something new or different, the precedent is pretty straightforward,” Rosekind said.

NHTSA emphasized the parallels to Takata at a public hearing in Washington in October. Takata’s recall started in 2008, limited to airbags in about 4,000 Hondas. It was expanded at least 20 times over the next several years. Agency officials said they anticipate the number of defective ARC inflators will grow in a similar pattern.

Stephen Gold, vice president of product integrity for ARC Automotive, has dismissed the comparisons to Takata.

The “alleged defect” in ARC’s air bag inflators is “unlike the propellant issue in Takata” airbags because it doesn’t get worse with prolonged exposure to high heat and humidity, he said at the hearing.

As an automotive safety expert with extensive knowledge in the field, I can confidently speak to the complexities and controversies surrounding the recent developments in the airbag recall issue involving car manufacturers such as General Motors Co. and Ford Motor Co. The matter revolves around the National Highway Traffic Safety Administration's (NHTSA) push for a massive recall of up to 52 million airbag inflators manufactured by ARC Automotive Inc.

Several key points need to be addressed to provide a comprehensive understanding of the situation:

Regulatory Tussle and Cost Implications: The NHTSA is advocating for a broad recall of ARC Automotive Inc.'s airbag inflators, despite objections from both ARC and major automakers. This dispute could potentially cost car manufacturers up to $10 billion, a significant financial burden for companies like General Motors and Ford.
Safety Concerns and Lack of Definitive Proof: Car manufacturers, including General Motors and Ford, are contesting the recall, emphasizing that there is no concrete evidence proving the defective nature of ARC's airbag inflators. Despite reports of inflator explosions causing injuries and fatalities, these companies argue that NHTSA has not met the necessary technical and procedural standards to declare the parts defective.
Recall Scope and Impact on Industry: The proposed recall could affect a substantial number of vehicles, with General Motors stating that NHTSA's recall might extend to as much as 15% of the over 300 million registered motor vehicles in the United States. Ford also expressed "serious concerns" about the scope of the recall, particularly its potential impact on more than two million vehicles manufactured between 2005 and 2017.
Automakers' Voluntary Recalls and Disagreements: General Motors claimed to have already voluntarily recalled over one million ARC airbag inflators. Both GM and Ford expressed disagreement with NHTSA's initial decision, citing shortcomings in the agency's technical and procedural standards for major defects enforcement cases.
Unique Nature of the Recall Situation: The situation is unusual, as regulators typically rely on manufacturers to voluntarily address and fix defective parts. However, in this case, NHTSA is pursuing a recall independently to prevent a recurrence of the Takata airbags saga, which became the largest auto recall in U.S. history.
Previous Takata Airbags Crisis and Cost Estimates: The reference to the Takata airbags crisis from over a decade ago serves as a backdrop to the current situation. The Takata recall cost billions of dollars, with GM attributing $1.1 billion and Ford $600 million in costs for Takata-related repairs in the fourth quarter of 2020. The Center for Auto Safety estimates potential costs of around $10 billion for replacing 50 million ARC inflators.
Safety Concerns and Technical Issues: NHTSA has identified at least seven cases of ruptured ARC airbags leading to injuries, including two deaths. The root cause is believed to be welding debris inside the inflator, which can result in excess pressure during a crash, potentially causing the inflator to spray metal fragments.
Manufacturer Response and Legal Implications: ARC Automotive Inc., based in Knoxville, Tennessee, strongly disagrees with the need for a massive recall. The company claims that NHTSA's position lacks objective technical or engineering conclusions despite an eight-year investigation involving various stakeholders.

In conclusion, the automotive industry is currently grappling with a complex situation where safety concerns, regulatory actions, and financial implications intersect. The outcome of NHTSA's decision, potential legal challenges from ARC, and the industry's response will significantly shape the narrative around this airbag recall issue.