AutoNation Stops Selling Cars With Takata Airbags

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AutoNation, Inc. ( AN), the largest auto retailer in the US, announced yesterday, that it would no longer sell any used vehicles that are subject to be recalled due to faulty air bag systems that have been supplied by TAKATA CORP UNSP ADR ( TKTDY). The decision came in as the auto dealer argues that there is a lack of any clear direction from the government, along with contradictory advice from various auto makers.


In an interview with Reuters, Chief Executive Officer of Auto Nation, Mike Jackson said that the company would not sell any vehicle that was subject to a possible recall because of faulty Takata air bags. He also said that customers are being advised to not to carry any passenger in the front seat, unless the airbag has been repaired. Cars coming in for service subject to Takata air bag warnings are being repaired and if parts are not available then a sticker is being placed warning against riding in the passenger seat.


AutoNation said that it currently has almost 400 vehicles that are subject to Takata air bag issues which are currently on hold, representing 1% to 2% of the entire inventory.


The air bag defect is caused by a faulty propellant, which if exposed to humidity, can lead to faulty deployment of the air bag. This causes the air bag to inflate with so much pressure that metal canisters explode, spraying metal shrapnel and hurting passengers and drivers. According to estimates provided by Bloomberg, almost four deaths have been linked to the issue and over eight million vehicles from ten automakers have been recalled.


The current move came in as the auto retailer lacks any clear directives regarding the issue. According to Mr. Jackson: 'We have a very difficult situation on our hands. Every manufacturer has a different policy.' He also said that every auto maker is suggesting a different course of action; some suggest removing passenger side air bags, while other suggests informing customers regarding the potential risk they face.


Mr. Jackson also criticized the National Highway Traffic Safety Administration (NHTSA) for being a 'Tower of Babel' and suggested that the NHTSA should take the lead and issue appropriate orders so that a uniform policy can be applied. Last week, the Obama administration referred to the agency's attempts to handle the issue as 'sub optimal'.


Earlier this week, consumers filed a class action lawsuit against Takata and major automakers including Toyota and Honda, accusing the companies of defrauding them by concealing crucial information.


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