Takata falls on report recalls may widen to 100m vehicles

[TOKYO] Takata Corp plunged as much as 16 per cent after the Nikkei newspaper said US regulators plan to call for expanded recalls of air bags already at the center of the biggest safety crisis in the automotive industry's history.

The shares fell 12 per cent to 362 yen as of 9.55am in Tokyo trading after declining to as low as 345 yen.

The National Highway Traffic Safety Administration has told carmakers that recalls will expand to all vehicles with air bags lacking a moisture-absorbing desiccant that keeps the devices from deteriorating, the Nikkei reported Saturday, citing unidentified sources.

There are more than 100 million such vehicles worldwide, the newspaper said.

Jared Levy, a spokesman for Takata, declined to comment. The company has lost more than half of its value this year, dropping its market capitalization to about 30.2 billion yen (S$382 million).

Takata inflators that can deploy too forcefully, rupture and spray plastic and metal shards at vehicle occupants have already prompted more than a dozen auto manufacturers to recall at least 60 million air bags worldwide. The defective components are linked to the deaths of 10 motorists in the US and a pregnant woman in Malaysia in 2014.

A fatal accident involving a Honda Civic driver in India last year also is under investigation.

ROOT CAUSE

A researcher hired by a coalition of automakers said in February that moisture seeping into Takata's inflators was determined to be the reason the air bags may rupture. Several other investigations are still underway, and challenges with determining root cause have held back automakers and the supplier from deciding how the companies will divvy costs.

Takata has estimated cash and equivalents may drop 24 per cent to 49.7 billion yen by the end of March 2017 if recalls continue at the current pace, a person familiar with the matter said last month.

Takata is seeking sponsors that would replenish its capital and allow it to emerge as a new company, said the person, who asked not to be identified because the internal forecast and search are confidential.

BLOOMBERG