CORRECTED-UPDATE 2-Faulty Takata airbags prompt expanded Toyota recall
(Corrects second paragraph to say more than 7 million, not 6.5 million; corrects bullet point to say the same)
* Takata says more vehicles could be recalled
* Record-keeping errors at plant in Mexico
* Honda, Nissan, Mazda check for problem
* 7 mln cars with Takata airbags recalled since late 2008
By Yoko Kubota
TOKYO, June 11 (Reuters) - Japanese airbag maker Takata Corp's safety crisis deepened on Wednesday after the world's biggest carmaker Toyota Motor Corp recalled 650,000 more vehicles in Japan, and the supplier cautioned further fixes may be needed.
The latest recall brought to more than 7 million the total number of cars equipped with Takata airbags to be called back worldwide over the last five years.
Takata, the world's No.2 manufacturer of auto safety equipment, said there could be more recalls from other automakers because of problems tracking potential defects with airbag inflators that date back over a decade.
The Tokyo-based auto supplier said it had discovered record-keeping errors at a plant in Mexico where potentially faulty airbag inflators were made in 2001 and 2002.
In 2013, carmakers including Toyota, Honda, Nissan Motor Co and BMW recalled about 3.6 million vehicles because of flaws in Takata airbag inflators that could cause them to explode in an accident.
Takata did not disclose how much it expected Wednesday's Toyota recall would cost. The company's shares were down over 4 percent when the Tokyo market closed.
Previously, Takata told U.S. safety regulators that it improperly stored chemicals and botched the manufacture of the explosive propellants used to inflate airbags.
The company has also said it kept inadequate quality-control records which made it impossible to identify vehicles with potentially defective and dangerous airbag inflators.
The Takata-related recall in 2013 was the largest airbag-related recall in history and came after a series of recalls, accidents and at least two deaths allegedly caused by faulty airbags.
Toyota said it was expanding a recall it announced in April 2013 that involved 2.14 million vehicles manufactured between 2000 and 2004. The serial numbers Takata provided for potentially flawed inflators had been incomplete, Toyota said.
In an unusual step, Toyota also said it would instruct its dealers in the United States and other overseas markets to begin replacing suspect Takata inflators on all of the vehicles covered by last year's recall. Previously, the automaker had asked its dealers to inspect the airbags and only replace those that were judged to be defective.
"We have judged that it is more certain to replace everything," Toyota spokesman Naoki Sumino said.
Toyota's expanded recall comes as rival General Motors Co faces scrutiny over why it took more than a decade to come to terms with ignition switch problems that resulted in at least 13 deaths.
Honda, Nissan and Mazda also said they were investigating whether they needed to recall more vehicles due to problems tracking faulty Takata parts. BMW said it was not aware of any impact to its vehicles.
In January, Takata began investigating whether there were other vehicles with potentially faulty inflators not covered by the previous recalls after being contacted by Toyota, company spokesman Toyohiro Hishikawa said.
Toyota spokesman Ryo Sakai said the automaker had been notified of one case in which a defective front passenger-side airbag inflator caused a seat cover to burn and two cases where the inflator ruptured when the airbag deployed.
Toyota vehicles covered by the recall include the Corolla and Camry sedans, and Tundra trucks.
The inflators under investigation were manufactured between September 2001 and September 2002 at Takata's Mexico plant, Takata said. Some of the explosive wafers used in the airbag inflator may have been exposed to excessive moisture or pressed into shape with too little force, it said.
That could cause the inflator to explode when the airbag is deployed, potentially sending bits of shrapnel into the vehicle, the previous investigation found.
It was not immediately clear how many Takata airbag inflators could have defects. Takata has notified other automakers besides Toyota about the issue, Hishikawa said. He declined to name those companies.
Takata will be supplying the inflators that will be used as replacements in the Toyota recall, Hishikawa said.
The Takata problems may benefit rivals like Sweden's Autoliv , where executives have noticed an increased focus on quality among clients since its Japanese competitor's first airbag recall last year. (Additional reporting by Ed Taylor and Helena Soderpalm; Editing by Chris Gallagher and Jeremy Laurence)