Toyota joins Honda as automakers ditch Takata air-bag inflators

A Takata employee holding a signboard for the company's Annual General Meeting in Tokyo in 2014.
A Takata employee holding a signboard for the company's Annual General Meeting in Tokyo in 2014. PHOTO: REUTERS

TOKYO (BLOOMBERG) - Toyota Motor joined Honda Motor in saying they won't use key components made by Takata Corp, whose air bags are at the centre of the biggest automotive safety recall.

"The inflator using ammonium nitrate produced by Takata will not be adopted by Toyota," Akio Toyoda, Toyota president, said at a briefing on Friday (Nov 6). "What's most important above anything else is the safety and peace of mind of customers."

Takata fell 3.7 per cent to 856 yen as of 2:12 pm in Tokyo trading. The stock had earlier declined as much as 15 per cent and pared losses before Toyota's announcement. By comparison, the benchmark Topix index gained 0.7 per cent.

Honda and Toyota are the two companies with the most number of vehicles recalled because of Takata's air bags, which have been found to rupture with excessive force and are linked to more than a hundred injuries and eight deaths. Toyota's announcement adds to the expanding list of automakers that are distancing themselves from the supplier.

Mazda Motor said on Thursday its new cars will no longer use Takata air-bag inflators linked to scores of injuries and seven deaths in the US, while Subaru-maker Fuji Heavy Industries and Mitsubishi Motors 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 Nikkei reported on Friday that Nissan Motor plans not to use Takata's air-bag inflators in new models.

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 US lawmakers and its auto-safety regulator. Even investors appeared to think the worst was over, with the stock up 14 per cent 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.

Takata, which reports earnings on Friday, plunged by the daily limit in Tokyo trading on Thursday, sinking 25 per cent to 889 yen. Spokesman Toyohiro Hishikawa declined to comment for this story.

Asked whether the company will survive, Takata president Shigehisa Takada told reporters on Wednesday, "there's risk."

Any blows to Takata's air bag business are devastating because it's the company's largest product segment, at 38 per cent of its 642.8 billion yen in sales for the fiscal year ending in March. Inflators are only a portion of its air bag products, and other components the company has to fall back on include seat belts, steering wheels, electronics and child seats.