PhotoThe Takata airbag recall list keeps getting longer. So far, the National Highway Traffic Safety Administration (NHTSA) puts the total at 28 million vehicles from 14 car companies.

Besides the 10 fatalities and over 100 injuries linked to the defective airbags, the economic toll has been huge. A Rice University professor suggests the toll may be hard for Takata to ever overcome.

Anastasiya Zavyalova, assistant professor of strategic management at Rice University’s Jones Graduate School of Business, is an expert in reputation management. She looks at countless cases where a company runs into a major issue with its customers. It is either able to recover from that adversity and move on, or it goes down for the third time.

Severity and consequences

In the Takata situation, Zavyalova says the severity and consequences of the problem make it especially difficult.

"The consequences suffered by drivers and passengers of the vehicles with defective airbags are severe,” she said, in a statement emailed to ConsumerAffairs. “And, as many studies suggest, the more severe the consequences, the higher the market and customer penalties imposed on the company."

If that weren't difficult enough, Zavyalova points to another problem. Takata has not been able to conclusively point to the cause of the rupturing airbags, which then spray the vehicle's occupants with shrapnel.

"Years after the first recall involving Takata airbags, the company still has ‘little clue as to which cars used its defective inflators, or even what the root cause was.’Without conducting an internal investigation and identifying the cause of the problem, the company cannot assure its buyers that it has dealt with the issue,” she said.

Losing customers

She says that has caused some big customers, such as Honda and Toyota, to look elsewhere for airbags. Then last week came another huge problem for the company.

A U.S. Senate investigation into the airbags found what investigators said was widespread manipulation of airbag inflator test data by Takata employees, with some occurring after the recalls began.

The Senate findings, by the minority staff of the Commerce Committee, were disclosed by Sen. Bill Nelson (D-Fla.), the panel's ranking member. Nelson said committee investigators made the findings after reviewing thousands of company documents and emails dating back more than a decade.

Zavyalova says a pattern of unethical decisions by a company is a self-inflicted wound, from which it is hard to recover.

"Perhaps, the most important characteristic of the scandal is how Takata tackled the warning signs,” she said, citing the committee report. “As such, the scandal was not a result of one bad decision, but a consequence of a ‘pattern of deceit at Takata that continued long after the severity of the airbag defect came to light.’”

All in all, Zavyalova said Takata is facing a crisis that may prove difficult to overcome.

“Because of the severe consequences associated with the defective airbags, the company’s inability to pinpoint the underlying cause of the problem and the revelation of its unethical decision-making throughout the process, Takata may be facing a long road to recovery,” she said.


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