Four car manufacturers have agreed to a $553 million deal with Japan's Takata over the defective airbags that were blamed for 16 deaths and resulted in the recall of 16 million vehicles.
Four car manufacturers agreed to a $553 million settlement to address class-action economic loss claims covering owners of nearly 16 million recalled vehicles with potentially defective Takata airbag inflators, court documents filed on Thursday showed.
Toyota Motor Corporation's share of the settlement costs is $278.5 million, followed by BMW AG at $131 million, Mazda Motor Co at $76 million and Subaru Corp at $68 million.
While the settlement does not mean an end to legal headaches faced by Takata Corporation or its car maker clients, the resolution could help the embattled Japanese air bag maker's efforts to search for a financial sponsor by removing one litigation uncertainty.
Shares of Takata, which was not named as a plaintiff in the case, jumped 20 percent in Tokyo on Friday. Takata has been searching for more than a year to find a financial sponsor to pay for costs to replace its inflators which are at the centre of the auto industry's biggest-ever recall.
US auto components maker Key Safety Systems (KSS) and private equity fund Bain Capital are trying to strike a rescue deal worth around 200 billion yen ($1.8B) with Takata's steering committee and its automaker customers.
Knock-on effects of recall
The settlement highlights the knock-on effect of the recalls, which began around 2008 and cover around 100 million inflators around the world used in vehicles made by 19 automakers.
Takata's inflators can explode with excessive force and unleash metal shrapnel inside cars and trucks. They are blamed for at least 16 deaths and more than 180 injuries worldwide.
"This is a settlement between us and our customers," said a Tokyo-based spokeswoman for Mazda.
Lawsuits against Honda Motor Co, Ford Motor Co and Nissan Motor Co have not been settled, lawyers said.
Takata declined to comment on the settlement.
Judges's approval needed
The four automakers who settled said in a joint statement they agreed to the deal "given the size, scope and severity of the Takata recall," but did not admit fault or liability. The automakers said the settlements, if approved by a Florida judge, will be overseen by a court-appointed administrator.
The settlement includes an outreach program to contact owners; compensation for economic losses including out-of-pocket expenses; a possible residual distribution payment of up to $500; rental cars for some owners; and a customer support program for repairs and adjustments, including an extended warranty.
In January, Takata agreed to plead guilty to US charges of criminal wrongdoing and to pay $1 billion to resolve a federal investigation into its inflators. The majority of the air bag-related fatalities and injuries have occurred in the United States.
Automakers have recalled 46 million Takata air bag inflators in 29 million US vehicles. By 2019, automakers will recall 64 million to 69 million US inflators in 42 million vehicles, regulators said in December. Most inflators have not been fixed.