Automakers settle Takata airbag case for $553m
- Author: Kyle Warner May 20, 2017,
May 20, 2017, 0:47
Four auto makers agreed to a $553m settlement to address class-action economic loss claims covering owners of almost 16-million recalled vehicles with potentially defective Takata airbag inflators, court documents filed on Thursday showed.
Four automakers including Toyota (NYSE:TM) agree to pay $553M to settle claims stemming from rupture-prone Takata (OTCPK:TKTDY) air bags, in the latest legal settlement in a long-running safety crisis linked to 11 deaths and ~180 injuries in the USA alone.
The case is In re: Takata Airbag Product Liability Litigation, 15-md-02599, U.S. District Court, Southern District of Florida (Miami).
Takata's air bag inflators can explode with too much force, hurling shrapnel into drivers and passengers.
The faulty Takata-made safety equipment in question has caused 11 deaths and 180 injuries.
Auto makers are in the process of recalling an unprecedented 42 million vehicles with almost 70 million Takata air bags in the US, a crisis that has dented the supplier's finances and forced it to seek an investment from a rival and weigh a bankruptcy filing.
The settlements also provide compensation for economic losses resulting from the recall including paying reasonable out-of-pocket expenses; a potential residual distribution payment of up to $500; rental cars to the most at-risk owners while they wait for recall remedies; and a customer support program for repairs and adjustments, including an extended warranty.
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The settlement calls for reimbursing current and former auto owners and lessees for costs they incurred for renting or buying replacement vehicles while waiting for those with defective air bags to be fixed. "We appreciate the efforts of Toyota, BMW, Mazda and Subaru to do right by their customers in reaching these agreements, and we look forward to the court's approval so implementation can begin soon".
The recall has sent Takata to the brink of bankruptcy.
Officials pointed out that economic loss claims pending against Ford, Honda and Nissan will continue to be prosecuted.
Further, a new independent outreach program that seeks to dramatically increase recall remedy completion rates will be established. Owners getting a recall can be reimbursed for lost wages, transportation and child care costs.
Toyota would pay the most under the settlement, at $278.5 million. The four brands in the class-action settlement are Toyota, Subaru, Mazda, and BMW.
Takata earlier this year was hit with a $1bn in criminal penalties to resolve an investigation into the inflators, after pleading guilty to criminal wrongdoing.