Honda and Nissan fall on airbag recall

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

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.

Learn about the Asian markets and CFD trading at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.