Airbag Concerns Prompt Daimler U.S. Recall of 840,000 Vehicles

Daimler has said it is to recall 840,000 U.S. vehicles with Takata airbag inflators that could be defective, resulting in a charge of 340 million euros ($383 million) for the German automaker.

Daimler said late on Tuesday it had decided to recall about 705,000 Mercedes-Benz cars and about 136,000 Daimler vans, without giving details on which models were affected.

Daimler said it would account for the cost by revising its 2015 financial results published last week, lowering the net profit to 8.7 billion euros and group 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 keeps his “buy” recommendation on Daimler’s stock.

The Stuttgart-based group on Tuesday reiterated expectations that earnings from the continuing business would increase only slightly this year after making big gains in 2015, reflecting higher investments and a more moderate rise in sales in China.

Last month Takata Corp said it was declaring 5.1 million additional inflators defective after new testing and following the death of a driver in December in a 2006 Ford Ranger after an airbag rupture.

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. To date 14 automakers have recalled a total of about 24 million U.S. vehicles involving about 28 million Takata airbag inflators.

Takata said other automakers involved in the most recent expansion include Honda Motor Co, Volkswagen AG and its Audi unit, and Mazda Motor Co, American Honda Motor Co, BMW AG and Saab.

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

In December the U.S. National Highway Traffic Safety Administration named a former Justice Department official as a monitor to help regulators supervise one of the biggest and most complex safety recalls ever undertaken in the U.S. automotive industry.

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

(Additional reporting by Andreas Cremer in Berlin; Editing by David Gregorio, Greg Mahlich)