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ZF CEO says, TRW investment to help Takata replace defective airbags would be short-term

ZF Friedrichshafen is ready to invest more in airbag inflator output to meet replacement demand following the global recall of defective airbags made by Takata Corp. The investment would come through U.S. supplier TRW Automotive Holdings, which ZF in September agreed to buy for $13.5 billion.

But ZF CEO Stefan Sommer said cranking up inflator production would generate only a short-term sales boost. It wouldn’t be a long-term strategic shift to win market share in the product. “We will support [TRW] if they invest in this area because we need to help the automotive industry to cope with this issue of the replacement of the Takata technology,” he said.

Speaking Sunday at a Japanese racing event north of Tokyo, Sommer said he doesn’t have a clear picture of how much extra capacity TRW has to increase inflator output. “This is a growth perspective,” he said. “But it is only a temporary growth perspective.”

The combined ZF and TRW would be better off investing in next-generation safety technology, rather than plowing money into replacing someone else’s defect parts, he said.

“In the long term we are seeing more sophisticated systems and higher installation in this regard, rather than replacing some others, due to recalls,” Sommer said. “We would like to invest in technologies and win market share due to superior technology.”

Under pressure from U.S. federal regulators, Japanese airbag manufacturer Takata has asked rival suppliers if they can help produce replacement inflators for the company’s customers.

One alternative is outsourcing production to rival suppliers.

Takata is under pressure because it can’t keep up with demand for replacement inflators. The National Highway Traffic Safety Administration lists 7.8 million vehicles in the U.S. made by at least 11 automakers as potentially subject to recall. And that doesn’t count vehicles recalled in Japan and other countries.

The recalls target airbags prone to explode with force so excessive that they can shred passengers with metal fragments. Five deaths have been linked to Takata’s exploding airbags.

TRW CEO John Plant has confirmed that his company has been approached by Takata and that TRW is willing to “help them.”

Sommer said Sunday that he expects ZF’s takeover of TRW to be closed in the second quarter of next year.