(Adds GM advice to dealers on Chevrolet Cruze sedans)
By Yoko Kubota and Maki Shiraki
TOKYO, June 26 Japanese auto parts maker Takata
Corp could face a $500 million charge and a net loss
this year - its second in three years - as a widening recall of
air bag inflators begins to kindle worries despite its deep
Automakers have recalled 10.5 million vehicles over five
years to fix Takata air bags deemed at risk of exploding and
shooting shrapnel at drivers and passengers, in what has become
one of the five biggest recalls in automotive history.
Creditors are not overly worried about the financial health
of Takata, which has about $1 billion of cash on its books,
banking sources said.
But they are closely watching the company, which may also
face a grilling from shareholders at its annual meeting on
Thursday, after the latest recall of 5.2 million cars this
"There is the worry that the volume of transactions with
vehicle makers could decline because of the recall," said Koji
Endo, an analyst at Advanced Research.
But he added: "The company has long had strength in design
and development ... From the perspective of multiple parts
sourcing as well, it would be hard to imagine large volumes
shifting to other suppliers in the short term."
The safety woes have nonetheless taken their toll on shares
of the world's second-biggest auto safety parts maker, which
have fallen nearly 30 percent since the start of the year
compared with a 6 percent drop in Tokyo's benchmark Nikkei
Honda Motor Co and Toyota Motor Corp were
among four Japanese car makers joining this month's global
recall over potentially flawed Takata air bag inflators made in
That tally looks set to expand further after Honda and six
others said this week they were recalling more vehicles in some
high-humidity regions of the United States at the request of the
National Highway Traffic Safety Administration to replace Takata
air bag inflators.
General Motors Co on Wednesday told its North
American dealers not to sell an inventory of about 33,000 new
and used Chevrolet Cruze sedans from model years 2013 and 2014
because of a potential problem with Takata air bags.
A Takata spokeswoman said the financial impact of the
recalls was unclear.
But several analysts said they were assuming a cost per
recalled vehicle of around $90 to $100, based on replacement
part prices, labour costs and other factors.
That could mean a charge of around $500 million over this
month's recalls for the year to next March, pushing it into a
net loss for the year.
Takata has forecast a 16 billion yen ($157 million) profit
for the year to March 2015, after returning to the black last
year from a record 21.1 billion yen net loss in the year to
Takata Chief Executive Shigehisa Takada and Chief Operating
Officer Stefan Stocker, who are expected to appear in front of
shareholders at Thursday's annual meeting in Tokyo, said in a
statement this week that the company would make concerted
efforts to strengthen its quality control and prevention
Shortly after car makers last year recalled 4 million
vehicles worldwide over potentially exploding passenger-side air
bags, Takata took a $300 million charge, equivalent to a
cost-per-recalled vehicle of about $75.
The cost of the latest recall could escalate if vehicles
made later than 2002 or by additional auto makers become
involved, or if a safety investigation in the United States
finds evidence that driving in high humidity increases the risk
of air bag explosions, as officials have indicated is possible.
($1 = 102.0500 Japanese Yen)
(Additional reporting by Taiga Uranaka; Editing by Edmund
Klamann and Alex Richardson)