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Takata Refuses to Recall Faulty Airbags, Automakers in a Fix

Japan-based Takata, which is one of the leading global suppliers of automotive safety systems and products, recently refused to abide by the U.S. government’s request for a nationwide recall for its air bags. Takata said that the recall of vehicles now depends on the automakers. The company added that it is unable to detect the reason behind the air bag explosions. However, it will cooperate with the automakers.

The driver-side air bags manufactured by Takata have an inflator that was produced with a faulty part. Thus, when an air bag is deployed, the inflator can explode and shoot out metal fragments into the vehicle. As a result, automakers are forced to recall series of vehicles.

Since 2008, auto manufacturers have recalled a total of 14 million vehicles globally due to faulty driver-side and passenger-side air bags produced by Takata. This year, ten automakers including Toyota Motor Corp. (TM) and Honda Motor Co., Ltd. (HMC), have recalled 7.8 million vehicles in the U.S. due to the faulty airbags.

The recalls were mainly in the high-humidity areas in Southern U.S., Hawaii and some other territories as prolonged exposure to airborne moisture leads the inflator to burn faster and ruptures the metal inflator container. There have been reports of five deaths worldwide associated with this problem.

After this decision by Takata, Honda announced that it will expand its regional recall due to the faulty Takata-made driver-side air bags. The automaker intends to satisfy all customer concerns due to this defect. In addition, Honda is in discussions with Autoliv, Inc. (ALV) and Daicel about the supply of replacement airbag inflators. In order to satisfy the increasing demand, Autoliv will construct an additional inflator capacity in its existing manufacturing facilities. Deliveries will start almost after six months.

Honda will also participate in the joint industry-wide third party research to share information and ensure that all the inflators that need replacement are identified and fixed. In addition, the automaker will cooperate with regulators and airbag suppliers to make sure that the repair of vehicles is undertaken as soon as possible.

Toyota also announced that it will be recalling 190,000 vehicles in Japan and China in order to replace the potentially defective front passenger-side air bags of Takata. Toyota will be recalling 185,000 vehicles across 19 models including the Corolla and Alphard in Japan, and the remaining 5,000 vehicles will be recalled in China. This recall by Toyota is a precautionary measure as the actual problem is still unknown.

Ford Motor Co. (F) also announced that it will expand the U.S. recall of vehicles with Takata-made passenger-side air bags by 38,500 units. With this, it will be recalling 98,000 vehicles in total due to Takata air bags. Ford will recall certain Ford Ranger vehicles of model years 2004 and 2005, and Ford GTs of model years 2005 and 2006 that are sold in Florida, Hawaii, Puerto Rico and the U.S. Virgin Islands. The recall will also cover certain areas with high humidity including Georgia, Alabama, Mississippi, Louisiana, Texas, Guam, Saipan and American Samoa.

Chrysler Group also announced that it will expand the U.S. recall of vehicles with Takata air bags.

Toyota and Ford currently carry a Zacks Rank #3 (Hold), while Honda and Autoliv hold a Zacks Rank #4 (Sell).

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