Both Honda And Mazda Call It Quits With Takata

Takata the world’s largest supplier of airbags, suffers another major blow to its supply chain and rightfully so.

If you bought shares in Takata Corporation sometime in 2014, my condolences to your overall stock portfolio. Earlier today (Nov. 5, 2015) Honda and Mazda both announced that they no longer would be using Takata as their supplier of airbags and will seek a replacement manufacturer in the coming months with interim suppliers already in use. The markets responded with brutal efficiency and more than a 600 point drop was the result at the end of trading with a downward trend tapering off for the foreseeable future.

According to Auto News, analysts are now questioning how much life is left in this company. Typically monopolies are safe bets to invest in, especially when it comes to something as simple as airbag inflators. But when the world’s two biggest car manufacturers call it quits, you know these are indicators to cut your losses and dump these stocks.

It seems the lead cause for this switch in manufacturers comes from the force at which ammonium nitrate used in the airbags is propelled out of the steering wheels. Takata openly admitted to manipulating test results and misleading multiple buyers. Although fined to the tune of $70 million, it only amounted to a handful of days of equivalent sales and in the long term, wouldn’t affect Takata.

According to Auto News, “U.S. regulators say Takata’s inflators use a chemical propellant they suspect causes the airbag to explode with too much force, spraying metal shards into the car. The inflators have been linked to eight deaths, all in Honda cars, and have led to the recall of more than 40 million cars worldwide.”

Subaru was also reported to be considering dumping Takata.

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In this day and age of cost cutting and data manipulation, it surprises us to think that anyone can really get away with deceptive tactics. Yet time and time again we are reminded of how valuable watch dog groups and whistle blowers are. We hope once nefarious actions are being remedied behind the scenes in acknowledgement of these companies falling to the wayside.