Tuesday 25 October 2016
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Automakers Divorce Takata In Big Numbers

Automakers Divorce Takata In Big Numbers

Nissan Motor Company joined Toyota Motor Corp. and Honda Motor Co. in saying it won’t use key components made by Takata Corp., as more automakers distance themselves from the airbag supplier whose defective devices are behind the biggest ever automotive safety recall.

“In line with the recent announcement from the United States’ National Highway Traffic Safety Administration, we have decided to no longer use inflators containing ammonium nitrate in airbags for future models,” Dion Corbett, a Nissan spokesman, said in an e-mail.  “We will continue to put our customers’ safety first and work to replace the inflators in vehicles under recall as quickly as possible.”

Honda, Toyota, and Nissan are the three companies with the most vehicles recalled because of Takata’s airbags, which have been found to rupture with excessive force and are linked to more than a hundred injuries and eight deaths.

Takata posted a $70 million loss in the second quarter, and slashed its full-year net income forecast after incurring losses related to recalls.

Toyota President Akio Toyoda said at a briefing in Tokyo that Takata inflators using ammonium nitrate won’t be adopted by Toyota. “What’s most important above anything else is the safety and peace of mind of customers,” Toyoda said.

Mazda Motor Corp. said its new cars will no longer use Takata airbag inflators, while Subaru-maker Fuji Heavy Industries Ltd. and Mitsubishi Motors Corp. are considering the same.

The comments follow Honda’s decision to stop using Takata inflators in new models and its accusation that the company manipulated test data. The emerging rifts mark an unusual repudiation in Japan, where corporate relationships are measured in decades and Takata had counted on automakers’ support despite more than a year of criticism from U.S. lawmakers and NHTSA.

Even investors appeared to think the worst was over, with the stock up 14 percent this year at one point through May. The tide turned this week when Honda surprised the market and set the stage for a potential exodus of more customers.

“Although recall costs were piling up, Takata’s operational profits weren’t bad, which is why the market was optimistic,” said Chihiro Ota, general manager at SMBC Nikko Securities Inc. in Tokyo.

“With customers now distancing themselves from Takata, investors started worrying about how the company can pay all those costs. What can ease this drop? Until we know how it happened and where the responsibility lies, the trend is down.”

Honda made its announcement hours after the U.S. National Highway Traffic Safety Administration fined Takata as much as a record $200 million. The agency ordered the company to phase out ammonium nitrate-based inflators, linked to seven deaths and almost 100 injuries in the U.S. by 2018.

NHTSA also said Takata provided “selective, incomplete or inaccurate information” to the agency and customers since at least 2009.

Other companies are stepping up to provide alternative supplies to carmakers. By March, Daicel Corp., Autoliv Inc. and TRW Automotive will make about 68 percent of those components, according to a letter Takata sent to NHTSA in July.

Honda, which has bought parts from the supplier for more than 50 years, said this week it will be able to get all replacement inflators from companies other than Takata in the foreseeable future. The carmaker will be buying the substitute components from all three of Takata’s competitors.

Photo Credit: 360b /