As recalls mount, Takata, Honda stuck in uneasy reliance

AIR bag manufacturer Takata Corp (7312.T) and Japanese carmakers including Honda Motor Co (7267.T) are locked in the commercial equivalent of a bad marriage; not entirely happy in each other’s company but unable to break apart and wary of potentially costly court battles.

Honda on Friday unveiled a new model with an unusual sales pitch – fuel efficient, lots of cargo space and, by the way, no air bag inflators made by Takata, the Japanese supplier at the center of a global safety crisis that has rocked both companies.

Over the past five years, recalls have ballooned to include 36 million vehicles fitted with potentially lethal Takata air bags, triggering a criminal investigation and lawsuits in the United States, and testing ties between Takata and its main customers, bankers and auto executives say.

Automakers don’t normally discuss supply arrangements for components like air bags in their new models.

But in a departure that underscores an increasingly strained relationship, Sho Minekawa, Honda senior managing director, said the new Shuttle wagon sold only in Japan would use inflators from Takata’s rival, Daicel Corp (4202.T).

“We use very little from Takata for our domestic models and that’s been the trend in recent years,” Minekawa said in response to a question at the launch of the new car. “There was a time when we used a lot.”

The uneasy dynamic explains why Japan’s automakers have not been agitating for a shake-up or even restructuring at Takata even as they give new contracts to other suppliers.

The automakers need Takata to supply replacement parts for urgent repairs and cannot demand compensation that would endanger its ability to do so in an industry where no rival could readily take up the slack.

A court battle could risk embarrassing disclosures about the responsibility of automakers in reviewing Takata’s designs or in pushing for cost cutting, a banker who has been in contact with Takata said.

“The most important thing from the perspective of the automakers is that they can ensure replacement parts are being supplied in a stable fashion,” said Masaki Higurashi, deputy director of the automobile division at Japan’s trade ministry who is involved in coordinating the government’s monitoring of the recall crisis.