Takata's Shares Soar 20% After Auto Makers Settle Airbag Claims
- Author: Fernando Stephens May 20, 2017,
May 20, 2017, 0:38
According to a news release, plaintiffs in the Takata Airbag Product Liability Litigation filed class action settlement agreements resolving claims against Toyota, Subaru, Mazda and BMW that will accelerate the removal of unsafe airbag inflators from 15.8 million affected vehicles while also compensating consumers for their economic losses.
The four automakers said in a joint statement that they had agreed to settle "given the size, scope and severity of the Takata recall", but did not admit fault or liability.
Takata's inflator defects caused at least 16 deaths and more than 180 injuries because of explosion with an excessive force. About 100 million inflators have been recalled worldwide by 19 major automakers, the largest automotive recall ever for a single safety issue.
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.
Millions of auto owners whose vehicles were outfitted by the Takata airbags recall could soon receive some type of compensation.
BMW, Mazda, Subaru and Toyota (the automakers) today announced agreements to resolve economic loss claims in the Takata multidistrict litigation (MDL) in the United States.
The goal of the settlement is to increase recall remedy rates for cars fitted with the inflators.
The recall has sent Takata to the brink of bankruptcy. The automakers agreed to provide rental cars to owners most at risk, including those with older vehicles or living in humid areas like the Southeast or Hawaii. Owners getting a recall can be reimbursed for lost wages, transportation and child care costs.
Drivers of almost 16 million vehicles made by Subaru, Toyota, BMW and Mazda are all eligible for compensation.
Tokyo-based Takata in May 2015 agreed to double a USA recall to a record more than 30 million vehicles made by some of the world's biggest automakers. Ford, Honda and Nissan have yet to reach similar agreements.
The potentially defective airbags, which can spray shrapnel into occupants, are on more than 42 million vehicles worldwide.
Takata agreed pleaded guilty to fraud in February after agreeing to pay a US$1 billion penalty.
The settlement comes in the wake of mass recalls of airbags produced by Japanese company Takata.