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Takata may tap Japanese automakers for support amid massive, costly air bag recalls

Kyodo

Auto parts supplier Takata Corp. will consider seeking support from Japanese automakers such as Toyota Motor Corp. and Honda Motor Co. to brace for the massive costs of global recalls and compensation over its potentially faulty air bag inflators, sources said Thursday.

If Takata asks for help, Japanese automakers will likely weigh various options to ease the burden on the company, as they hope to make sure its auto components continue to be delivered, the sources added.

Takata could be allowed to pay recall-linked costs by installations rather than at once to the automakers that shoulder them first. Japanese automakers could also refrain from asking Takata to lower auto parts prices, according to the sources.

The parts maker is expected to hold a meeting soon with automakers to discuss how it aims to respond to the recall crisis and to provide replacement parts for its potentially faulty air bag inflators.

With around 50 million units called back globally since 2008, Takata is expected to shoulder massive costs, with a Japanese government source expecting the figure to reach ¥400 billion ($3.41 billion).

Takata and automakers have been separately trying to identify the cause of the defect. They plan to decide on how to share the burden of the recall costs by around June, which is necessary to finalize the support measures, the sources said.

Dissatisfied with Takata’s response to the crisis and its reluctance to disclose information, some automakers appear unwilling to extend support.

Still, the recalls could hurt the financial health of Takata, whose business segments other than air bags have performed relatively well, the sources said.

Takata had group net assets worth around ¥140 billion as of the end of last September, but its financial standing could deteriorate depending on how burden-sharing related to the recalls will be made.

U.S. auto safety regulators said in November that ammonium nitrate had played a role in violent ruptures of Takata air bags, fining the Japanese parts supplier up to $200 million. So far, nine deaths linked to the faulty Takata air bags have been confirmed worldwide.

Honda, a major buyer of Takata air bags, has said it will not use Takata inflators in new models being developed, as Takata had reported false test data.