— This is the script of CNBC's news report for China's CCTV on May 20, Wednesday.
Welcome to CNBC Business Daily. I'm Qian Chen.
The U.S. National Highway Traffic Safety Administration confirmed Tuesday earlier reports that air bag manufacturer Takata plans to declare 33.8 million vehicles defective.
Major automakers have recalled about 17 million vehicles with Takata air bag inflators in the U.S. since 2013.
This recall will be the biggest ever, in US history.
CNBC's Phil Lebeau has more.
IT IS A MASSIVE RECALL,..DESIGNED TO FIX DEFECTIVE AIR BAGS LINKED TO FIVE DEATHS AND MORE THAN 100 INJURIES.
TAKATA, A JAPANESE AUTO PARTS MAKER, AND ONE OF THE LARGEST AIR BAG SUPPLIERS IN THE WORLD,....
HAS AGREED TO REPLACE 33.8 MILLION AIRBAG INFLATORS
THE REPAIRS WILL INVOLVE NUMEROUS MODELS FROM 11 AUTOMAKERS
MOST OF THEM BUILT BETWEEN 2002 AND 2008
[Anthony Foxx/U.S. Transportation Secretary] "Lives are at stake, it is our job to protect them and so that is why we are doing what we are doing today."
THE AIRBAGS BEING REPLACED COULD POTENTIALLY SHOOT OUT SHARDS OF METAL WHEN DEPLOYED.
EXACTLY WHY THAT HAPPENS IS STILL UNCLEAR.
HUMIDITY IS BELIEVED TO BE A FACTOR.
TAKATA SAYS REPAIRS WILL INITIALLY FOCUS ON OLDER VEHICLES IN STATES WITH HIGH HUMIDITY.
BUT MAKING MILLIONS OF REPLACEMENT AIRBAG INFLATORS AND GETTING THEM INTO VEHICLES WILL LIKELY TAKE MANY YEARS.
Former Takata engineers told The New York Times last year that they had raised concerns over a decade ago that ammonium nitrate, the explosive material Takata uses, was sensitive to moisture and temperature swings, but those concerns went unheeded.
The agency said the recall could take several years.
Analyst told CNBC, it may cost Takata four to five billion dollars.
[Scott Upham, Valient Market Research, Founder, President & Chief Executive Officer] "At the end of the day, it's gonna be about 4 to 5 billion dollar affect on the company. Really, we will not see the full effect of this till late next year, as all the production parts, the replacement parts will be in automaker's hands. It's gonna take that long for them th produce the replacement parts as well as some of the other suppliers that have brought in by the automakers to bail Takata out from this crisis."
Kelley Blue Book's Senior Director KARL BRAUER said the recall may change the out-sourcing model in the future auto industry.
[KARL BRAUER, Kelley Blue Book, Senior Director] "I think (automakers) will learn it whether auto suppliers' claims meet their expects and they got all the long term durabilities that they are requiring. They'll maybe do their own stress testing of parts that are coming from outside. Or, do as you said, maybe move something inside, indoor, inhouse if it's really a critical part."
Let's take a look at the stock market - shares of Takata dropped more than 10 percent during today's trading session.
CNBC's Qian Chen, reporting from Singapore.
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