Takata’s Woes Are Complete: Now Toyota Has Dropped It – Fortune

Posted: Friday, November 06, 2015

Anyone at Japanese auto parts supplier Takata Corp who asked themselves this week ‘how can it possibly get worse?’ got their answer Friday, as Toyota Motor Co.


became the latest automaker to say it won’t use the hapless company’s airbag inflators.

U.S. auto safety regulators earlier this week linked Takata’s


failing inflators to the use of ammonium nitrate as a propellant, prompting automakers from top customer Honda Motor Co


and Mazda Motor Corp


to say they will no longer fit the product in new cars.

Such ostracism has fanned concerns over Takata’s future, and its shares have fallen 40% this week alone. They’re down nearly 75% since the airbag scandal broke last year.

U.S. regulators believe inflators that use ammonium nitrate can cause airbags to explode with excessive force, spraying shrapnel inside the vehicle. Regulators have linked them to eight deaths, all in Honda cars, triggering the recall of tens of millions of vehicles worldwide.

Takata is the only supplier to use the volatile chemical in its air bags.

The company slashed its annual earnings forecast on Friday, and said it had yet to determine the full impact of a global safety recall.

Takata said it expects a net profit of 5 billion yen ($41.04 million) in the year to end-March, just a quarter of what it estimated three months ago. The Tokyo-based firm booked a combined special loss of 17.2 billion yen for the April-September period to pay a $70 million fine and legal fees.

Airbag products accounted for 38% of its revenue last year, although it’s not clear how much of that is down the inflators themselves.

Takata has said it would phase out ammonium nitrate, which it uses in most of its inflators, by the end of 2018.

Some customers signalled a willingness to continue using Takata’s products as long as they do not contain ammonium nitrate.

Toyota President Akio Toyoda said it would consider other Takata inflators as long as they were safe.

“Even if they’re made by Takata, we intend to take an unbiased approach (on other inflators) as long as we can confirm their safety,” he told reporters on Friday.

Mazda on Thursday said it would drop all Takata inflators containing ammonium nitrate from its new cars. Subaru-maker Fuji Heavy Industries Ltd


and Mitsubishi Motors Corp


said they were considering doing the same.


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