Nissan Joins Growing List Of Automakers Dropping Takata’s Air Bag Inflators

Nissan joins a growing number of automakers that have decided to stop using key components made by Takata, as more companies are distancing themselves from the air bag supplier after its defective devices were revealed to be responsible for the biggest auto safety recall ever.

“In line with the recent announcement from the United States’ National Highway Traffic Safety Administration, we have decided to no longer use inflators containing ammonium nitrate in airbags for future models,” said Nissan representative Dion Corbett. “We will continue to put our customers’ safety first and work to replace the inflators in vehicles under recall as quickly as possible.”

Both Toyota and Honda have already publicly announced the same decision to stop using air bag inflators from Takata, which have been found to rupture with excessive force and are linked to more than one hundred injuries and eight deaths. As a result, Tokyo-based Takata posted a $70 million loss in the second quarter and slashed its full-year income forecast from $160 million to $40 million.

“The inflator using ammonium nitrate produced by Takata will not be adopted by Toyota,” said Toyota’s president Akio Toyoda at a briefing in Tokyo. “What’s most important above anything else is the safety and peace of mind of customers.”

Mazda has also stated its plan to no longer use Takata air bag inflators in its new cars, while both Subaru-maker Fuji Heavy Industries and Mitsubishi are considering the same move.

Initially, after the scandal was revealed, Takata experienced continued support from Japanese automakers despite more than a year of criticism from U.S. lawmakers and its auto-safety regulator. Even investors believed that the worst was over, with the company’s stock up 14 percent this year at one point through May. However, the tide turned when Honda, which accounted for approximately 10 percent of the part maker’s global sales, made its announcement to stop using Takata’s products and accused the supplier of manipulating test data, thereby setting the stage for more customers to follow suit.

“Although recall costs were piling up, Takata’s operational profits weren’t bad, which is why the market was optimistic,” explained Chihiro Ota, general manager at SMBC Nikko Securities Inc. in Tokyo. “But with customers now distancing themselves from Takata, investors started worrying about how the company can pay all those costs. What can ease this drop? Until we know how it happened and where the responsibility lies, the trend is down.”

Takata was recently fined $70 million by the National Highway Traffic Safety Administration (NHTSA) for its failure to properly alert regulators to air bag issues.

The company has agreed to phase out the use of ammonium nitrate in its inflators by 2018 and faces an additional $130 million fine if it doesn’t comply with NHTSA orders or if any new violations are discovered.

Valient Market Research estimates that Takata’s share of the global air bag inflator market may fall to 5 percent by the end of the decade, from 22 percent last year.

“I really don’t see how they’re going to be able to survive as an inflator manufacturer,” said Scott Upham, founder of Valient Market Research, who has followed the air bag industry for over 20 years. “When your major clients publicly come out and say that they’re not going to use your products anymore, it makes it very difficult to sustain your business.”