Toyota has decided to drop Takata. The Japanese automaker has confirmed it won’t source key components, the most notable being airbags, from Takata.
Toyota Motor Corp. joined Honda Motor Co. in severing ties with Takata Corp. The defective airbags supplied by Takata are behind the biggest ever automotive recall.
Confirming the news, Toyota President Akio Toyoda said, “The inflator using ammonium nitrate produced by Takata will not be adopted by Toyota, What’s most important above anything else is the safety and peace of mind of customers.”
The chemical Toyoda referred to creates an explosion that rapidly expands the airbag. However, long-term testing has revealed that ammonium nitrate can deteriorate over time. Furthermore, the degeneration process is accelerated in the presence of moist air, which puts drivers and their passengers in areas like Florida at a much higher risk.
For over 50 years, Honda has been buying components from Takata. Corporate relationships in Japan have always been quite strong and have survived the test of time. In the past, Takata has been assured of business from the likes of Toyota, Honda, and many other multi-generation automakers, and despite more than a year of criticism from U.S. lawmakers and its auto safety regulator, its buyers showed no signs of abandoning the company, reported Auto News.
But then, the U.S. National Highway Traffic Safety Administration fined Takata $70 million or as much as a record $200 million if the company fails to comply with the U.S. orders. The agency has clearly instructed the company to swiftly phase out ammonium nitrate-based inflators within the next three years. These inflators have so far been linked to seven deaths and as many as 100 injuries in America alone.
This caused Honda to back out of the decades-long partnership. Despite losing one of its biggest customers, Takata somehow managed to stay confident. But the airbag business contributes 38 percent of Takata’s revenue, and losing Honda was certainly a big blow, causing Japanese market experts to raise doubt about the company’s survivability.
But Takata somehow survived the shock and investors helped its stock gain a healthy 14 percent jump in May, shared Chihiro Ota, general manager at SMBC Nikko Securities Inc. in Tokyo.
“Although recall costs were piling up, Takata’s operational profits weren’t bad, which is why the market was optimistic. 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’s airbags are behind the largest ever automotive recall in modern automotive history. Worryingly, there are reports that indicate Takata was aware of the problem for almost a decade but chose to bury the potentially damaging test results. The Inquisitr previously reported that former employees of Takata revealed the company clandestinely conducted tests on the airbags. They realized that the inflators within the bag, which are supposed to blow up a shock-absorbing balloon in front of the driver within a fraction of a second, could rupture and possibly produce a barrage of sharp shards of metal that would hurtle with ferocious velocity towards the victim, causing potentially more injury than the accident in which the car was involved.
Takata has agreed to phase out airbag inflator system that relies on ammonium nitrate. The propellant has been blamed for the explosions. Besides phasing out the system entirely, the company also agreed to a schedule for replacing many of the devices already in use over the next two years, reported ABC News.
Now that Toyota has also decided to stop procuring key auto parts from Takata, the latter’s future does look quite grim, reported Yahoo News.
[Photo by Yoshikazu Tsuno / Getty Images]