Devil in the detail: negotiating supplier contracts requires close scrutiny

As UK car sales peaked for a 39^th consecutive month, manufacturers in the automotive sector are looking to increase production capacity and expand their roster of suppliers. But in their bid to facilitate this increase in demand, manufacturers must consider the recent case of Takata, the Japanese airbag supplier, and exercise caution to make sure the contracts put in place are robust in order to mitigate operational or reputational risks.

Takata first announced a fault affecting its airbags in April 2013 and issued a recall notice to six car manufacturers.  Faults affecting their airbags could cause the inflators to explode with too much force when they are deployed, endangering drivers and passengers.  Further recalls have since taken place culminating in the recent decision of the National Highway Traffic Safety Administration in the United States to order Takata to issue a nationwide recall.  This brings the total number of vehicles affected up to about 35 million worldwide, making it the largest vehicle recall in history.