Honda opts for Takata rival to supply Accord air bags - sources

By Reuters

Jan 23, 2015 10:12 PM EST

Honda Motor Co (7267.T) has chosen a competitor of embattled Takata Corp (7312.T) to supply air bags for the next North American version of its Accord sedan, the automaker's best-selling vehicle, two people with knowledge of the decision said.

In the first major defection by a carmaker since Takata's safety crisis began, Honda, Takata's largest customer, will use air bags made by Toyoda Gosei (7282.T) for the all-new Accord, scheduled to go on sale in August 2017, the people told Reuters.

Honda's decision to shift to a competitor for the most important vehicle in its largest market represents a major blow for Takata after a safety crisis involving its air bags that forced the recall for more than 21 million vehicles globally.

Honda spokeswoman Akemi Ando said the company had no immediate comment. Takata also had no immediate comment. Toyoda Gosei spokesman Shingo Handa said the company would not comment on its customers as a matter of practice.

Toyoda Gosei will supply driver's-side air bags as well as knee and curtain air bags for the North American version of the Accord, the people with knowledge of the move told Reuters.

Honda said last month that it had signed a deal with Autoliv (ALV.N) to begin making replacement parts for recalled vehicles later this year. The Japanese automaker also said it had begun discussions with inflator maker Daicel Corp (4202.T).

Since 2008, Honda has recalled more than 13 million vehicles equipped with Takata air bags, including more than 10 million in the United States.

Air bags made by Takata for Honda and 10 other manufacturers have been recalled because of a defect that puts them at risk of rupturing in an accident and shooting metal shards at vehicle occupants. The defect has been linked to at least five deaths and dozens of injuries.

Honda Chief Executive Takanobu Ito has spoken privately about his frustration with Takata, a seatbelt and air bag maker Honda groomed and had long considered part of its circle of preferred suppliers, according to people close to Ito.

Takata supplied air bags for the U.S. version of the Accord since at least the 2000 model year, according to recall notices. Honda's Ando declined to comment on the automaker's air bag supply arrangements for the current version of the Accord.

Honda sold just over 388,000 Accords in the United States in 2014, representing just over a quarter of its total U.S. sales. The vehicle is also the platform for other popular Honda models.

One of those with knowledge of Honda's plans, who asked not to be named because the sourcing decisions remain confidential, said the automaker would begin using Toyoda Gosei air bags beginning with the redesigned CR-V and the all-new Odyssey minivan in 2016.

Together, the CR-V and the Accord represent about half of Honda's U.S. sales.

In another sign of pressure on Takata, General Motors (GM.N), Takata's third-largest customer, said last month that it had developed contingency plans in case the recalls of potentially lethal air bags widened.

GM said it had directed Takata to share specifications with TRW (TRW.N) and Autoliv so that they could make replacement parts for the top U.S. automaker if needed.

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