Investor confidence in Takata continues to drop

Article by Christian A., on December 4, 2014

Investors are not too optimistic of the future of airbag supplier Takata Corp., even as the Japanese company is adamant of its financial strength. In fact, short-seller bets on a drop in Takata’s share price peaked on Nov. 19, 2014, and still lingers near that level, after the National Highway Traffic Safety Administration threatens to impose fines against the Japanese group unless the supplier expand regional recalls into a national one.

Investors are wagering Takata share would further drop after diving over 50 percent this year. Takata had remarked that it would be difficult to estimate its liabilities as it continues to face a surge of lawsuits, a federal grand jury subpoena in the United States and heighten oversight by regulators in Japan.

Koji Endo, an analyst at Advanced Research Japan, told Automotive News via phone that serious long-term investors “do not want to have anything to do” with Takata shares at this point. He disclosed a number of investors he has met weeks prior believe that the Japanese supplier might need some financial aid.

He added the even if Takata doesn’t fall into bankruptcy, it would still be in trouble from a financial aspect. NHTSA is probing Takata’s airbags after they were linked to at least four deaths in the US and another one in Malaysia. The death in Malaysia – involving a pregnant woman – could mean the airbag crisis could beyond US borders.

Japan has created a group that would monitor recalls and coordinate with NHTSA. Managing Director Akira Warita of Matsui Securities Co. said in e-mail to Automotive News that there have been significant hikes in both short and long positions in Takata shares since Sept. 30, adding that many investors believe that the company is “cheap” and its stock price will recover.

Executives from Takata Corp. as well as from Honda, Toyota and BMW were bound to attend a Senate hearing set by the subcommittee of the House Energy and Commerce Committee at Capitol Hill this week. The Senate hearing is aimed at assessing the management and response of the auto industry as well as that of the NHTSA to the airbag safety recall. Among those who have been invited to the Senate hearing are Takata senior vice president of quality assurance Hiroshi Shimizu and NHTSA deputy administrator David Friedman.

Rep. Terry Lee, R-Neb., chairman of the Subcommittee on Commerce, Manufacturing and Trade, has remarked that Americans are weary of the safety recalls, adding that there is a necessity to know if an adequate plan is in place to address safety risks. According to Lee, first priority of the subcommittee is to ensure all vehicles with the defective airbags are fixed as soon as possible.

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Topics: takata, airbag, recall

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