December 2, 2014 / 10:59 PM / 3 years ago

Worried about broader fallout, Japan moves to contain air bag crisis

United States Air Force First Lt. Stephanie Erdman, from Destin, Florida, testifies before a Senate Commerce, Science and Transportation Committee hearing on "Examining Takata Airbag Defects and the Vehicle Recall Process." in Washington November 20, 2014. REUTERS/Gary Cameron

TOKYO (Reuters) - Japan’s auto recall enforcement division, whose 16 members work from a cramped office on the eighth floor of the transport ministry building in Tokyo, only found out about safety issues with Takata Corp air bags in late-2008 - more than three years after the company says it first learned of problems.

The ministry, which doubles as Japan’s safety regulator, then took a largely passive approach to the crisis unfolding in the United States - Takata’s biggest market where more than 10 million cars have since been recalled - rubber-stamping recall filings by automakers after incidents reported abroad.

“We had no idea there were already accidents in the United States, so there was no reason for us to be concerned at the time,” said Masato Sahashi, director of the recall office.

To be sure, Japan’s automakers are not obliged to report overseas accidents to officials in Tokyo unless it leads to a recall. And, while defective Takata air bags have been linked to at least five deaths, all in Honda Motor cars, there have been no reported fatalities or injuries in Japan.

But more than half a dozen air bag inflators have ruptured in cars at Japanese scrap yards, officials have said, and one of those incidents, in a 2003 Toyota WiLL Cypha, is being investigated and could prompt a wider recall. There have also been four explosions of Takata air bags in cars that were in use between 2011-14 that led to recalls.

Now, the ministry, concerned about a broader reputational fallout for the entire Japanese auto industry as recalls escalate, is finally scrambling into action.

Late last month, it set up an eight-person task force to speed up recalls and learn more about why Takata’s air bags can explode with dangerous force in accidents. Honda, Takata’s biggest customer, opened its own investigation into the air bag problems in 2007.

The task force is in daily contact with Takata and holds regular meetings with a company representative, demanding information as the ministry weighs up whether to order an expanded recall in Japan - as the U.S. regulator has done - said a person with knowledge of the closed-door proceedings.

At the same time, a small group of officials at the powerful Ministry of Economy, Trade and Industry (METI) is in touch with Takata and Japanese automakers about how to ensure the timely supply of millions of air bags to fix those recalled, an official involved told Reuters.

“We want to see Takata moving with a bit more urgency,” the official said.

To date, around 2.6 million vehicles have been recalled in Japan for potentially defective Takata air bags, out of a worldwide total of more than 16 million.

“NOT A TRUE WATCHDOG”

Japan’s regulator has come under fire in the past over a perceived leniency towards an industry that’s a national champion.

When Toyota Motor initially chose not to recall its Prius hybrid in 2010 for braking issues, politicians floated proposals to toughen the government’s monitoring and enforcement authority over recalls. Reporting requirements were tweaked, but critics say officials blocked wholesale changes.

“There’s no sense of tension between the regulator and the industry here. They’re not a true watchdog,” said Yoshitaro Nomura, a Tokyo-based lawyer who sued Mitsubishi Motors Corp on behalf of drivers after the company was found to have concealed information about its vehicles for decades to avoid recalls.

Japan’s auto regulator outsources the testing for defects to the National Traffic Safety and Environment Laboratory - a team led by nine retired engineers from major automakers. To avoid possible conflicts of interest, engineers don’t investigate vehicles made by their former employers. The agency declined to say whether its staff were investigating Takata air bags.

Japan also lacks a U.S.-style class-action system, and lawsuits against companies over product liability are seen as costly and time-consuming, discouraging many consumers from filing complaints.

The far bigger U.S. National Highway Traffic Safety Administration (NHTSA) has also been criticised for a piecemeal approach to the Takata crisis and for its earlier handling of a massive General Motors recall for faulty ignition switches.

The flurry of activity by Japanese regulators came after Takata baulked at NHTSA’s suggestion - since upgraded to an order - that it cooperate in an expanded recall, and after Takata’s chief safety officer testified before a U.S. Senate panel.

“Japan needs to consider preventative measures and take proactive action to investigate problems,” said Hiroshi Osada, a professor at Bunkyo University who was an outside quality management adviser to Toyota during its 2010 recall crisis.

“If Japan is serious about improving the management and quality of Japanese firms, the related agencies have to be more committed to prevent accidents even before there’s been a fatality. That should be their role,” he said.

Additional reporting by Chang-Ran Kim, Antoni Slodkowski and Norihiko Shirouzu in Tokyo; Editing by Ian Geoghegan

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