Daicel, Toyota affiliate plan capital tie-up to expand air bag businesses

Japanese chemicals maker Daicel and auto parts maker Toyoda Gosei Co said on Friday they will invest 1 billion yen ($8.98 million) in each other’s equity, deepening ties as both companies expand their global air bag businesses.

Daicel, which produces inflators used in air bags, along with polymer and plastic products, and Toyoda Gosei, which makes air bag modules, steering wheels and other auto components, have been growing their air bag-related businesses since a global recall of inflators made by Takata Corp has snowballed since 2013.

The companies would take a stake of about 0.3 percent in each other and discuss research and development opportunities that would enable them to further expand globally.

Headquartered in Japan’s automaking heartland of Aichi Prefecture, Toyoda Gosei is a group company of Toyota Motor Corp , which owns a 43 percent stake in the firm. Toyota also owns a 4.3 percent stake in Daicel.

Osaka-based Daicel supplies inflators to Takata, which has become its biggest customer as the embattled Japanese air bag maker struggles to produce enough replacement inflators in the global auto industry’s biggest ever recall.

Daicel also sells inflators to Key Safety Systems, the Chinese-owned, U.S.-based components maker which is in talks with Takata about a financial rescue.

Air bags and other safety-related products accounted for 28 percent of Toyoda Gosei’s annual revenue last year, up from 27 percent the previous year.

It has been increasing air bag sales to Toyota, Honda Motor Co and other automakers in the last few years, as an increasing number of automakers shift away from Takata.