Daimler, VW recall 1.5 million vehicles in U.S. over airbag worries

Finished Volkswagen cars arrive at the end of the assembly line prior to a visit by Volkswagen Group Chairman Matthias Mueller and Lower Saxony Governor Stephan Weil at the Volkswagen factory on October 21, 2015 in Wolfsburg, Germany.
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German carmakers Volkswagen and Daimler are recalling 1.5 million vehicles in the United States due to potentially faulty airbags made by Japanese company Takata, the focus of a long-running global safety crisis.

The move comes after U.S. auto safety regulators said last month that Takata had declared 5.1 million U.S. vehicles defective, revealing that far more air bags than previously thought were potentially unsafe.

Takata's inflators can explode with too much force and spray metal shrapnel into vehicle passenger compartments. They are linked to at least 10 deaths worldwide and more than 100 U.S. injuries.

Problems with Takata airbags were first reported in 2009. So far, 14 automakers have recalled a total of about 24 million U.S. vehicles involving about 28 million Takata air bag inflators.

Volkswagen said it will recall 680,000 vehicles in the United States due to the potentially faulty airbags, following Daimler which said late on Tuesday 840,000 U.S. vehicles with Takata airbag inflators would be checked.

Daimler said it was recalling about 705,000 Mercedes-Benz cars and about 136,000 vans after being notified by the U.S. National Highway Traffic Safety Administration (NHTSA) that certain Takata airbags were potentially defective.

Cars being recalled include the Mercedes-Benz SLK convertible, the C-Class and E-Class sedans, the M and GL-Class sports utility vehicles as well as the R-Class and SLS coupe made between 2005 and 2014.

Daimler is also recalling vans made between 2007 and 2014, including vehicles bearing the Dodge, Freightliner and Mercedes-Benz Sprinter brands.

Daimler said it was unaware of airbag failures in its vehicles, and that the numbers of vehicles involved in the recall could fall once further technical studies had been carried out by NHTSA.

Daimler said it would take a charge of 340 million euros ($383 million) to cover the cost of the recall. It will account for this by revising its 2015 financial results published last week, lowering net profit to 8.7 billion euros and earnings before interest and tax (EBIT) to 13.2 billion euros, from 8.9 billion and 13.5 billion euros respectively.

"This (340 million euros) is quite a big shortfall but the main message is that the current financial year will not be affected," said Frankfurt-based Bankhaus Metzler analyst Juergen Pieper who kept his "buy" recommendation on Daimler's stock.

Volkswagen said the U.S. recall affected VW models built between 2006 and 2014. A spokesman declined to comment on how much the recall could cost.

A spokesman for Volkswagen's luxury division Audi said it was carrying out a safety analysis and consulting with the NHTSA. It would comment once it had reached clear conclusions.

A BMW spokesman said the carmaker was in talks with the NHTSA, without commenting further.

Other manufacturers have announced big recalls of cars with Takata airbags over the last few years. A number of automakers from top customer Honda Motor to Mazda Motor have said they will no longer fit the product in new cars, fanning concerns over Takata's future.

U.S. regulators announced on Jan. 22 a new recall of about 5 million vehicles with potentially defective Takata air bags, covering some automakers not previously affected, including Volkswagen and Daimler.

The move was prompted in part by the death of the driver of a Ford Motor Ranger pickup truck, as well as new tests conducted on suspected faulty air bags.

Honda has recalled 2.23 million U.S. vehicles in the most recent Takata expansion. Ford has recalled 361,000 Ranger trucks and Mazda nearly 20,000 B-Series trucks built between 2004 and 2006.

In November U.S. regulators fined Takata $70 million and it is still under investigation by the Justice Department.