Toyota to Drop Takata as Supplier of Airbag Inflaters

TOKYO — The president of Toyota Motor said on Friday that his company would drop the embattled safety equipment maker Takata as a supplier of airbag inflaters, after a similar move by Honda, a decision that widens the fallout from the largest auto safety recall in history.

The president, Akio Toyoda, said at a news conference that Toyota was “placing 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. The company’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.

Regardless, Takata said it expected to earn a profit this year, albeit a significantly smaller one than it had forecast. It cut its projection for net profit in the fiscal year ending in March to 5 billion yen, or about $41 million, from ¥20 billion, citing the fine by American regulators and increased costs related to the recall of millions of vehicles.

American safety regulators this week effectively banned Takata from continuing to use ammonium nitrate, its main propellant. A consent order accompanying a $70 million fine imposed by the National Highway Traffic Safety Administration requires that the company phase out inflaters containing the compound unless it can prove they are safe.

Akio Kamimura, an analyst at Japan Credit Rating Agency, said a crucial question for Takata was how quickly it could switch to an alternative propellant. Though he did not question the company’s ability to survive, saying stable sales of products like seatbelts would provide a financial cushion, Mr. Kamimura this week cut his rating of Takata’s creditworthiness to just above junk-bond status.

“The prospect of lawsuit-related costs is also still a worry, so the outlook is negative,” he said.

Propellant materials vary among airbag makers, but since the early 2000s, Takata has favored ammonium nitrate, even as questions have mounted about whether the compound was vulnerable to changes in moisture and temperature. A small number of its inflater models contain a different compound, guanidine nitrate, and Takata said on Friday that it planned to expand production of those. But it declined to provide specifics about volumes or timetables.

“We will start changing to guanidine nitrate in the U.S. market, beginning with hot and humid regions, then move gradually to other markets,” Akiko Watanabe, a spokeswoman for Takata, said in a telephone interview.

Mr. Toyoda said Toyota would not rule out buying inflaters from Takata if it changed the design.

“As for other types of inflaters, we’d consider buying from Takata if their safety could be guaranteed,” he said.

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

This week, Honda, Takata’s largest customer, said that so far this year, about 25 percent of its new vehicles had been fitted with airbags that have inflaters made by Takata, and that it expected to completely switch to other suppliers by March.

Toyota makes about 10 million vehicles a year, more than double Honda, but it buys fewer Takata airbags. Toyota declined to indicate how many of its vehicles were currently fitted with Takata airbags or how soon it expected to complete its phaseout.

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