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Automakers Agree to Multi-Million Dollar Settlement Over Takata Economic Losses

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It’s not only Takata that is paying out millions of dollars because of its defective airbags. Automakers, too, are shelling out the cash. According to recent media reports, four automakers recently reached an agreement to compensate owners of nearly 16 million vehicles for money they lost due to the massive Takata airbag recall.

Defective Takata airbags can explode upon deployment, sending small pieces of shrapnel into the interior of the vehicle and causing injuries leading to vision and hearing loss, excessive bleeding, and sometimes, stroke. The products have been linked to at least 16 deaths worldwide and nearly 200 injuries.

Automakers Pay Consumers for Financial Losses

The settlement between the four automakers and consumers addresses a class-action lawsuit filed to recover economic losses related to vehicles with defective Takata airbags. Consumers claimed that because of the airbag problems, their vehicles lost significant value that they couldn’t recover.

Toyota, Subaru, Mazda, and BMW agreed to pay $553 million to compensate owners for these losses, and for things like lost wages, child care, rental car expenses, and vehicle storage costs accrued while consumers were getting their vehicles repaired. Payments are expected to total up to $500 for each consumer.

The court still has to approve the settlement.

Automakers Working Harder to Get Airbags Repaired

The settlement also requires automakers to expand their efforts to encourage vehicle owners to get their recalled vehicles repaired. According to CBS News, as of April 2017,

  • only 32 percent of Toyota owners,
  • 31 percent of Subaru owners,
  • 18 percent of Mazda owners,
  • and 16 percent of BMW owners

had completed airbag repairs. To increase those numbers, automakers have agreed to provide free rental cars to those owners who have high-risk vehicles. These are older cars, trucks, and SUVs that are regularly exposed to high temperatures and high humidity. These conditions are believed to increase the risk of airbag inflator explosions.

In total, the settlement covers 9.2 million Toyota vehicles, 2.6 million Subarus, 2.3 million BMWs, and 1.7 million Mazdas. Toyota, which has the largest share of defective airbags out of these four automakers, will pay the most, at $278.5 million.

These are not the only automakers dealing with issues like this. Honda, Ford, and Nissan are also facing lawsuits concerning economic damages, but it’s unclear whether they will negotiate similar settlement agreements.

Takata to Pay Out $1 Billion in Total

At the beginning of this year, Takata pled guilty to wire fraud and agreed to pay $1 billion in a settlement with the U.S. Justice Department. A total of $25 million of that total was paid to the U.S. government as a fine, and $125 million set aside to pay damages for those individuals who were injured by the airbags. Those payouts are beginning soon and will continue throughout the rest of the year. The remaining money will be paid to automakers to cover their costs in having to repair and replace the defective inflators.

Three Takata executives who allegedly falsified airbag test data also face charges. The Takata airbag recall affected over 42 million vehicles in the U.S. and is the largest in U.S. history.

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