Takata said to have changed design of its air bags in 2008

Takata began changing the safety devices in 2008 to reduce the risk that humidity would cause them to deploy abnormally, three people familiar with the matter said. -- PHOTO: REUTERS
Takata began changing the safety devices in 2008 to reduce the risk that humidity would cause them to deploy abnormally, three people familiar with the matter said. -- PHOTO: REUTERS

TOKYO (Bloomberg) - Takata, the air-bag maker that agreed to the largest automotive recall in U.S. history on Tuesday, began changing the safety devices in 2008 to reduce the risk that humidity would cause them to deploy abnormally, three people familiar with the matter said.

The company changed the composition of its propellant mix to mitigate the effect of humidity after Honda Motor Co. announced the first recall related to the flaw in 2008, the people said, asking not to be named because they aren't authorized to talk with the media. High humidity has been linked to a degradation of the propellant, increasing the risk that air bags may rupture and shoot fragments at vehicle occupants.

Takata's redesign to address the humidity problems, which hasn't been reported before, may solve one of the mysteries of the auto-safety crisis. The company, which agreed Tuesday to expand U.S. recalls to include about 34 million cars, has repeatedly said its current products are safe, yet it hasn't explained publicly the basis for its confidence. The majority of the vehicles recalled globally have air bags that were made before 2008.

"The thing that investors worry about the most is that we still don't know how long these recalls will last and how bad the negative effects will be," said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co. "Any news that they have managed to stabilize the situation and put the limit to risks from the recalls should be seen as positive because it would lift uncertainty, help determine the scope of the recall crisis."

Takata shares dropped as much as 10 per cent, the biggest intraday decline since Nov. 10, to 1,355 yen and traded at 1,358 yen as of 9:12 a.m. in Tokyo. It was the largest decline among companies in Japan's benchmark Topix index.

The redesign may also raise difficult questions for Takata since the introduction of a safer propellant mix could imply the previous mix was less safe. Takata didn't recall additional cars with the older air bags until about seven months later. Automakers have subsequently expanded recalls of the devices, which have been linked to six deaths and more than a hundred injuries.

Only selected parties including government officials have been informed by the company about the change to the propellant mix, one of the people said.

U.S. Recall The air-bag maker agreed to almost double the number of cars called back in the U.S. as part of a consent order with the National Highway Traffic Safety Administration, the regulator announced Tuesday, calling it the largest automotive recall in history. Takata agreed to make the recall nationwide - a step it had resisted - and submit its air-bag parts to the U.S. government for testing. The safety campaign covers 11 different automakers.