Takata Corp.’s airbag recalls may increase to 118.5 million worldwide after last week’s order by U.S. regulators compounded the biggest safety crisis in the history of the auto industry, according to estimates by Jefferies Group LLC.
Japan’s transport ministry and carmakers in other markets will probably follow the National Highway Traffic Safety Administration in calling back all airbag inflators that lack a moisture-absorbing desiccant, Takaki Nakanishi, a Tokyo-based analyst for Jefferies, wrote in a May 5 report. The expansion coud result in 55 million more air bags being recalled and 665.4 billion yen ($6.14 billion) in additional cost, according to Nakanishi, who was ranked as the top Japan auto analyst by Institutional Investor from 2003 to 2009 and again in 2013.
The estimates show the escalating financial toll on Takata as regulators compel the airbag supplier to retract its devices, which have ruptured and killed at least 13 motorists in the U.S. and Malaysia. Takata has seen its market value plunge by about 78% in the past year and has estimated a comprehensive of all of its airbag inflators to total about 2.7 trillion yen ($24.91 billion), according to a person familiar with the matter in March.
Takata inflators that can deploy too forcefully, rupture and spray plastic and metal shards at vehicle occupants have already prompted auto manufacturers led by Honda Motor Co. and Toyota Motor Corp. to recall about 62.5 million airbags worldwide, Jefferies estimates. The two automakers alone had recalled about 45.5 million of the 74.5 million non-desiccated air bags as of Feb. 11, Nakanishi wrote.
Honda is considering more recalls but hasn’t confirmed the number of additional vehicles involved, spokesman Teruhiko Tatebe said by phone. The automaker wasn’t the source of a Nikkei newspaper report Sunday that said Honda plans to recall more than 20 million air bags, Tatebe said. Clarity on the Takata inflator problem should be a “positive catalyst” for shares of Japanese automakers, particularly Honda, Nakanishi wrote.
Japan is still considering whether to expand Takata airbag recalls, Masato Sahashi, a transport ministry official, said by phone. Automakers are expected to expand recalls in Japan following NHTSA’s amended consent order without direction from the Japan transport ministry, as the scope has been the same for both countries previously, he said.
Moisture seeping into Takata’s inflators was determined to be the reason the airbags may rupture, an automaker coalition’s hired researcher said in February. Several other investigations are still under way, and difficulties determining root cause have held back carmakers and the supplier from deciding how they’ll divide costs.
If recalls are extended to desiccated inflators, the impact could reach 205 million total vehicles and 2.3 trillion yen ($21.22 billion) in costs, Nakanishi said.
By Craig Trudell, Ma Jie and Masatsugu Horie