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Honda Cuts Ties With Japanese Airbag Maker

FILE - Signage outside Takata Ignition Systems GmbH in Schoenebeck, Germany.

Airbag maker Takata faces new woes. Shares of the embattled Japanese auto parts supplier plunged Wednesday after the company was hit with a massive fine by U.S. regulators and dropped by its biggest client amid a scandal over defective airbag inflators.

Company shares were down nearly 20 percent in afternoon trading on the Nikkei exchange after Honda Motors announced it would no longer buy inflators from Takata to install in its front-seat air bags. Honda's decision came hours after the U.S. National Highway Transportation Safety Administration imposed a record $200 million fine on Takata for failing to warn the public and government about the problem inflators.

Eight people have been killed and more than 100 others injured when the airbags, designed to protect drivers and passengers in an accident, unexpectedly exploded, sending large pieces of metal into the vehicle and its occupants. All of the incidents were in cars made by Honda.

The defective airbag inflator has triggered a massive recall of millions of cars worldwide, including 19 million in the United States alone.

U.S. Transportation Secretary Anthony Foxx said Tuesday that Takata engaged in a pattern of "delay, misdirection and refusal to acknowledge the truth."

Under the settlement, Takata will stop building and selling airbags using an ammonium nitrite propellant, which experts believe was one of the causes of the explosions.

Takata will also speed up the recall and replacement of bags in affected car models, including many Hondas.

Takata must pay $70 million of the fine now, and would have to pay another $130 million if it fails to carry out all the orders of the U.S. agency. It is the biggest financial penalty ever imposed by NHTSA on an automotive company.