Honda Motor Co (7267.T) said it was ditching air bag inflators made by Japan’s Takata Corp (7312.T), after the top U.S. auto safety regulator on Tuesday fined the supplier $70 million and ordered it to stop using a potentially dangerous propellant.
Regulators have linked eight deaths – all in cars made by Takata’s biggest air bag customer Honda – to the inflators, which use ammonium nitrate and can explode with too much force, spraying metal fragments inside vehicles.
In a harshly worded statement, Honda said it would no longer use Takata’s inflators in front-seat air bags, adding that it was “deeply troubled” by evidence suggesting Takata “misrepresented and manipulated test data for certain air bag inflators”.
The automaker did not specify what alternatives it would use, but Honda is already buying more inflators from Takata rivals including Autoliv (ALV.N), TRW Automotive Inc [TRWTA.UL] and Daicel Corp (4202.T).
In response to the U.S. order, Takata said it would phase out ammonium nitrate in all its inflators by end-2018 even though it had not determined the root of the problem. Shares fell as much as 20 percent in Tokyo trade on Wednesday to their lowest in a year.
“Honda has taken a significant hit from this,” said Christopher Richter, senior analyst at consultants CLSA. “If the maker can’t figure out what the root cause is, can they afford the risk of continuing to use them as a supplier? For Honda, that’s a no,” he added.
In its statement, the U.S. National Highway Traffic Safety Administration (NHTSA) accused Takata of providing “selective, incomplete or inaccurate data” from 2009.