Japanese Firms to Benefit from Strong Airbag Sales

One area of the auto industry that may grow faster than actual vehicles is airbags. Two recent developments brighten the outlook for this industry segment. First, Toyota announced in July that all of its models sold in Japan will be equipped with side and curtain airbags. Second, the US NHTSA will gradually mandate side/curtain airbags beginning September 2009. This will triple the cost of airbags for each car compared with current levels with just the requirement of front seat bags.

There are essentially three airbag providers for the Japanese auto industry: Takata (7312), Toyota Gosei (7282), and Nihon Plast (7291). Among them, Takata may benefit most since 47% of its sales come from outside Japan. Because vehicles of the U.S. Big Three are less likely to be equipped with side/curtain airbags compared with Japanese cars, the NHTSA mandate should have a relatively strong impact on Takata.