Toyota will buy more than 13 million airbag inflators from Nippon Kayakuto to replace faulty ones, following the largest automotive recall ever.
Tens of millions of vehicles have been recalled by 10 different automakers since 2008 to replace airbags made by Takata, whose inflators have been linked to eight deaths and more than 100 injuries after exploding with excessive force, spraying shrapnel inside vehicles.
In the most proactive move yet by a customer of Takata, the Japanese carmaker asked the new parts supplier last month to expand its production facilities so it can supply Toyota from next July until 2020, a person with direct knowledge of the deal was reported as saying, information corroborated by a second individual who was briefed on the deal.
Takata says the issue with the inflators is caused by long-term exposure to heat and high humidity and Toyota based its order on the number of vehicles with Takata-made inflators it thinks could become dangerous as the cars age over the next few years.
If Toyota switches to Nippon Kayaku inflators, it "will replace the high-risk ones, in other words the older ones, first and then proceed sequentially" to newer inflators", one individual said.
Tokyo-based Nippon Kayaku could not immediately be reached for comment. A spokesman for Toyota declined to comment.
The sources declined to say how much the purchases would cost Toyota, but average inflator prices suggest a total of around $100-$150m. The person with direct knowledge of the deal would not say whether Toyota is helping Nippon Kayaku pay for its expansion or whether Toyota would keep buying its inflators after 2020.
Toyota considers a switch to Nippon Kayaku inflators as a precaution in case further recalls are required, but the move does not mean Toyota will stop buying Takata inflators, one of the individuals said. Toyota "won't do anything to crush Takata", he added.
"Toyota wouldn't want its business with Takata to disappear. This is a strategy where it's trying to maintain business and reduce risk," said Takaki Nakanishi, chief executive of Nakanishi Research Institute, which specialises in the automotive industry.
"As for Takata, even if its inflator business shrinks, it can certainly still survive as an air-bag maker if it buys inflators from other companies."
To date, Toyota has recalled more than 12 million vehicles with Takata-made air-bag inflators. Automakers are bearing the cost of most recalls while the root cause is investigated.
Lawmakers in the US have urged Takata to immediately recall all cars equipped with the company's air bags, a demand that could affect more than 50 million cars on US roads.