The tech world is no stranger to product recalls. They’re often related to defective batteries or various other electrical malfunctions that could potentially damage the product or even hurt consumers.
But there’s never been anything like what we’re seeing in the auto industry right now.
It is the largest product recall in U.S. history.
After nearly two years of recalls handled by auto manufacturers, the great airbag scandal has moved up the supply chain.
Today, Japanese auto parts supplier Takata Corporation announced that approximately 34 million American cars will have to be recalled due to defective airbags. That number amounts to nearly 14% of the total number of cars currently on the road in the United States.
The last product recall that was anywhere near this scale was in 1982 when Tylenol recalled 31 million bottles of its signature pain reliever after a rash of poisonings.
Tylenol’s incident was called a disaster and a tragedy. Seven people died from ingesting pills that were found to have been laced with potassium cyanide. The incident was singlehandedly responsible for creating tamper-proof packaging.
Takata’s recall is just as tragic. The defective ammonium nitrate-powered airbags can, according to the New York Times, “explode violently when they deploy, sending shrapnel flying into a car’s passenger compartment.”
A young woman whose Honda Accord was in an accident in 2014 baffled investigators with apparent stab wounds in her neck. These wounds killed the girl, and a recall notice from Honda that turned up in her mailbox is what ultimately revealed her killer.
Earlier this year, the airbags in a 2002 Honda Accord exploded and killed a driver in Texas.
All told, six people have been killed by these exploding airbags, and no fewer than a hundred have been injured.
The Best Free Investment You’ll Ever Make
Join Wealth Daily today for FREE. We’ll keep you on top of all the hottest investment ideas before they hit Wall Street. When you become a member today, you’ll get our latest free report: “The Nvidia Killer: Unlocking the $100 Trillion AI Boom.”
It contains the most promising AI companies and sectors poised for explosive growth. Our team of expert analysts has conducted thorough market research to uncover a hidden gem currently trading at just $2.
After getting your report, you’ll begin receiving the Wealth Daily e-Letter, delivered to your inbox daily.
Prior to today’s announcement, Takata deferred to car manufacturers and accepted no blame for the damage. The National Highway Traffic Safety Administration reprimanded the supplier for being uncooperative.
In 1995, the company faced a recall of more than 8 million cars for having defective seatbelts. It was the second-largest recall in the Department of Transportation’s history up to that point, and it affected Japanese cars.
Takata’s largest U.S. partner is Honda, but its airbags are present in vehicles by BMW, Chrysler, Daimler Trucks, Ford, General Motors, Mazda, Mitsubishi, Nissan, Subaru, and Toyota as well.
Nearly one in seven cars on the road in the United States is expected to be part of the recall, and this event — like the Tylenol recall — is going to be transformative to the auto industry in the United States.
The severity of this event cannot be understated. It will affect not only major auto manufacturers but also suppliers of parts and components, with a special focus on manufacturers of chemical propellants and a knock-on effect for sensor and relay manufacturers.
Good Investing,
Tim Conneally
For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.
