Newspaper article International New York Times

Toyota Plans to Stop Using Airbag Parts from Takata ; Decision Is Fresh Setback for Troubled Supplier after a Similar Move by Honda

Newspaper article International New York Times

Toyota Plans to Stop Using Airbag Parts from Takata ; Decision Is Fresh Setback for Troubled Supplier after a Similar Move by Honda

Article excerpt

The announcement is another blow to the equipment maker, whose airbags generate about 40 percent of its sales, which totaled $5.3 billion in 2014.

The future of the airbag maker Takata was thrown into doubt on Friday, as Toyota, the world leader in auto sales, said it would stop using the company's mainstay technology.

Toyota's move followed a similar decision earlier in the week by Honda and comes after months of frustration by Japanese auto makers with Takata, whose products are at the center of the largest automotive safety recall in history.

Akio Toyoda, Toyota's president, said on Friday that his company would drop Takata as a supplier of airbag inflaters, to place a "top priority on ensuring the safety and confidence of our customers."

"Going forward, we will not use Takata airbag components that use ammonium nitrate," he said, referring to a propellant in the inflaters that some specialists say can destabilize, in extreme cases causing the device to explode and send metal fragments shooting into the vehicle. Eight deaths and more than 100 injuries have been linked to the defective inflaters.

The announcement is another blow to Takata, whose airbags generate about 40 percent of its sales, which totaled $5.3 billion in 2014. Takata's share price dropped 6 percent on Friday, extending its decline to 40 percent over the three days since Honda dropped it as a supplier.

Other Japanese automakers, including Mazda, Mitsubishi Motors and Fuji Heavy Industries, the maker of Subaru vehicles, said this past week they were considering phasing out Takata's ammonium nitrate inflaters.

Recalls of tens of millions of vehicles have already taken a toll on Takata's finances. The company reported a net loss of 29.5 billion yen, or a little more than $240 million, last fiscal year. Its equity ratio, a measure of its ability to absorb financial shocks, was just over 31 percent at the end of the fiscal year in March, below average for a company its size and down from more than 50 percent in 2008, though still not in territory that analysts consider imminently dangerous.

Regardless, Takata said it expected to earn a profit this year, albeit a significantly smaller one than it had forecast. …

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