Explosive air bags
November 4, 2015
The Japanese carmaker Honda pledged Wednesday to find another supplier for its air bag inflators, saying it was "deeply troubled" to learn that Takata had falsified test data for some of its devices.
The announcement came as Honda presented a quarterly profit of 127.7 billion yen ($1 billion), up 7 percent from a year ago despite the cost of repairing vehicles with bogus inflators that have killed at least eight people and injured more than 100 worldwide.
The embattled auto parts supplier has come under fire in the US and abroad for using ammonium nitrate to deploy its air bags, which have been known to explode too forcefully and endanger passengers.
On Tuesday, the US auto safety regulator fined Takata $70 million (64 million euros) for its defective inflators - the largest civil penalty ever imposed by the US National Highway Traffic Safety Administration.
Takata's fault or not?
The regulator also ordered Takata to stop using the potentially dangerous propellant in its products. Shares in the auto parts firm slumped by as much as a fifth in Tokyo on Wednesday before ending trading 13.4 percent down, their lowest close in nearly a year.
Takata struck a chord of defiance, saying it still believed its inflators were safe. The company says it has still not identified the root cause of the malfunction but it has suggested it may have something to do with high humidity inside sealed passenger compartments.
That claim suggests the problem could lie with the auto manufacturers that purchase its air bags, rather than Takata itself. Honda has bristled at that suggestion but so far it has not demanded compensation from Takata for the cost of investigative or voluntary recalls.
That could change if recalls become official and the potential costs facing Takata are substantial. At $100 per vehicle, repairing faulty air bag inflators in millions of cars could cost the company more than its current market value of around $820 million.
Since 2008, around 40 million cars have been unofficially recalled over Takata inflators.
cjc/ng (Reuters, AP)