Honda and Nissan fall on airbag recall

Honda and Nissan have both seen stocks decline after a recall affecting millions of airbags.


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By :  ,  Financial Analyst

Honda and Nissan have seen their share prices fall today (June 23rd) after the manufacturers had to recall nearly three million vehicles to fix problems with their airbags.

Both companies use the same supplier for some their key safety equipment, but flaws in some of the airbags supplied by Takata Corp mean that over two million Honda vehicles, and around 755,000 Nissans, will need to be returned to the manufacturers to be fixed.

Bloomberg reports that the flaws in the airbags were associated with excess moisture and insufficient pressure when they were produced.

It is not the first time that Takata products have suffered from production issues. Last April,defective airbag inflators from Takata led to the recall of over three million Honda and Toyota vehicles.

In fact, since 2008 Honda alone has been forced to ask for six million vehicles to be returned over the course of nine separate recalls which were all related to Takata airbags. The company has been Takata’s biggest customer.

Scrutiny

It comes at a time when scrutiny in the auto industry is already at a peak, with health and safety among the biggest concerns.

General Motors has had to recall millions of its own models after it emerged that faulty ignition switches had been fitted in many key models, prompting chief executive Mary Barra to be called up to explain the problems to US politicians.

However, markets seem to have expected that there would be further casualties of Takata’s quality control problems. At close of trade in Tokyo, Takata stocks had actually risen by nearly 2.9 per cent to 2,111 yen.

That limited some of the company’s losses over the course of the year so far, but it has still seen 30 per cent shaved off its share price since the beginning of 2014.

Honda and Nissan did not fare quite so well. As of 07.00 BST shares in Honda had fallen by 0.63 per cent to 3,602 yen, while Nissan fared even worse with a 1.5 per cent decline to 984 yen.

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