Toyota, 3 other automakers settle suit over Takata air bags

Toyota, 3 other automakers settle suit over Takata air bags

Toyota, 3 other automakers settle suit over Takata air bags

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 US alone.

The automakers said the settlements, which are subject to approval by a Florida judge, will be overseen by a court-appointed administrator.

Takata Corp 7312.T inflators, which can explode with excessive force and unleash metal shrapnel inside cars and trucks, are blamed for at least 16 deaths and more than 180 injuries worldwide. More settlements are possible in the future as the companies note the "Takata airbag inflator recall is the largest such action in history and affects more than 42 million vehicles in the United States, across 19 automakers".

The problem touched off the largest automotive recall in US history involving 42 million vehicles.

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. These costs can include rental cars, child care, lost wages, or any other reasonable costs associated with bringing in a vehicle for repairs.

Further, a new independent outreach program that seeks to dramatically increase recall remedy completion rates will be established.

The settlement also calls for the automakers to pay out-of-pocket costs to affected owners.

As part of the settlement, Takata agreed to establish two independently administered restitution funds: one for $850 million to compensate automakers for recalls, and a $125 million fund for individuals injured by its airbags who have not already reached a settlement.

Of the overall $553m settlement announced on Thursday, $278.5m will be paid by Toyota, $131m by BMW, $76m by Mazda and the remaining $68m by Subaru.

More than 14 million of the air bags have been repaired in the USA, according to the National Highway Traffic Safety Administration. The company has agreed to pay $1 billion in penalties for concealing defects with its air bags.

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