Takata shares dive 25% after Honda stops use of its airbag inflators

Takata Corp share prices fell 25 per cent Thursday after its largest customer Honda Motor Co. announced it would no longer buy the company's airbag inflators.

The Japanese autoparts maker at the centre of the defective airbag scandal has lost $330 million in stock value in the last two days. Its 25 per cent fall Thursday was the largest permitted on the Tokyo exchange.

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Honda may not be the last automaker to abandon Takata, with both Mitsubishi Motors Corp and Subaru-maker Fuji Heavy Industries Ltd. saying they are considering abandoning its inflators.

A Toyota Motor Corp executive said on Thursday the company continued to investigate Takata's airbag inflators.

"We're thinking of not using Takata's inflators for future cars," Fuji Heavy CEO Yasuyuki Yoshinaga said.

Mazda Motor Corp. said it will stop using Takata inflators that use ammonium nitrate.

Those types of inflators can no longer be used in the U.S., after the National Highway Traffic Safety Administration ordered the company to begin phasing them out.

Takata will also have to replace every ammonium nitrate inflator it has sold in North America, a process that will take another four years.

On Tuesday, U.S. regulators imposed a $70 million fine on Takata for failing to report faults with its airbags, which can explode during a crash and send metal shards through drivers and passengers.

The exploding airbags have been linked to eight deaths and 100 injuries. And Takata may be forced to pay another $130 million if it does not meet the timeline for a recall set by regulators.

The question is how it is going to afford a costly recall of 34 million vehicles worldwideand large fines if its usual customers will no longer buy its products. The airbags were used in models made by 12 different auto makers.

Pressure is on at the company to create a better quality, more reliable airbag inflator. Ammonium nitrate replaced Tetrazone, a more toxic chemical, in inflators in the late 1990s.

The founding Takada family owns about 60 per cent of Takata, while Honda holds 1.2 per cent.