Automakers desperate to cushion Takata blow
The Japanese airbag manufacturer is still sinking under the continuous pressure of the most expensive vehicle recall in history, caught between bankruptcy and a perplexing takeover phase. The supplier, trying to avoid making its 83rd year of operation its last, is responsible for over 100 million defects in most global OEMs’ vehicles, hitting manufacturers’ profits significantly. Nearly 70 million air bags have been recalled in the US alone, with costs set to surpass $12 billion from the disaster. Automakers such as Volkswagen, General Motors and Honda met in New York last month to discuss solutions to the worsening issue, desperate to find a solution to the problem, although not much has been done. However, one thing is certain: theses companies that rely so much on Takata must help the supplier get back up-and-running. This will only be possible if a buyer takes interest in the dying supplier. If not, automakers’ capital will continue to crumble.
The Daicel Corporation, previously a strong favourite to take over Takata, has now been overtaken by Sweden’s Autoliv, a direct rival of the Japanese supplier, as OEMs believe the company would present the most efficient turnover process with minimum disruption. Apart from driving the final nail into its rival’s coffin, Autoliv is perceived - and rightly so - as the perfect acquisition for automakers, as they already own a large percentage of the global automotive safety market. Autoliv has the experience in the sector to successfully take over Takata, already operating assembly lines and other manufacturing processes needed to succeed, although it will have to deal with scrutiny from global authorities. If the acquisition goes ahead, Autoliv would accumulate Takata’s infrastructure and potentially hold upwards of a 50% market share, outpacing ‘next-in-line’ Hyundai Mobis (39.9%). This means that the supplier would dominate the global market, having complete control over prices and competition. Antitrust scrutiny from governments will block this much needed takeover, unless something is done.
With a limited chance for competitors, especially with Autoliv establishing vertical supply relationships with OEMs such as Hyundai and Kia, authorities may restrict the supplier’s operations. The company would have to sell shares to privatised bodies, so that it would not exceed market share limitations, although this is time consuming. However, as OEMs are so reliant on Takata components, couldn’t they buy into a percentage of the company? This would benefit both Autoliv and OEM customers, especially in the automotive safety sector which should fall under special rules. It is important that we do not disrupt this segment that is so relied upon by automakers. Large tier suppliers like Delphi and Visteon have previously chosen this route, and it has proved to be extremely successful. Whatever the solution, it will have to be as smooth and swift as possible.
Alex Kreetzer - News Editor
Simon Duval Smith
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