Dumped by Honda, air bag maker faces fresh questions over future

Wed Nov 4, 2015 6:25am EST
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By Naomi Tajitsu and David Morgan

TOKYO/WASHINGTON (Reuters) - Honda Motor Co said it will no longer use front air bag inflators made by Japan's Takata Corp, raising questions about the future of the embattled parts supplier.

Takata, which counts Honda as its biggest air bag customer, was fined $70 million by the leading U.S. auto safety regulator on Tuesday. Shares in the Japanese auto parts firm slumped by as much as a fifth in Tokyo on Wednesday.

Regulators have linked eight deaths - all in Honda cars - to the Takata inflators, which use ammonium nitrate and can explode with too much force, spraying metal fragments inside vehicles.

The fine adds to a growing list of potential bills Takata could face. To date, automakers have primarily borne the cost of 'investigative' or voluntary recalls as the root cause of the inflator defect hasn't yet been found. If recalls become official, the cost could switch to Takata.

Having to pay around $100 to fix each of the many millions of cars would cost Takata more than its current market value of around $820 million. Around 40 million cars have been unofficially recalled worldwide since 2008 over Takata air bag inflators.

Along with the fine, the U.S. National Highway Traffic Safety Administration (NHTSA) ordered Takata to stop using the potentially dangerous propellant in its products.

"DEEPLY TROUBLED"   Continued...

Visitors look at cars behind a logo of Takata Corp on its display at a showroom for vehicles in Tokyo, Japan, June 25, 2015. REUTERS/Yuya Shino