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Automakers Soon to Receive Restitution from Takata

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Up until now, automakers that sold vehicles with Takata airbags have had to budget significant funds to cover recall repairs. As millions of vehicles were added to the list, automakers had to not only offer free replacements to consumers, but they also had to run their own awareness campaigns to help notify consumers of the problem and get them into the dealerships so they could swap out the older, potentially unstable airbag inflators for newer, safer ones.

Now, some automakers are going to receive restitution. In a plan approved in April 2018, Toyota, Volkswagen, and Honda, among others, are expected to receive a share of an $850 million provided by Takata Corp’s restitution fund.

Takata Agrees to Restitution Fund for Automakers

The plan came about because of the criminal case filed by the United States against the Takata Corporation. Back in February 2017, Takata pled guilty to wire fraud. The court then entered an order requiring the company to pay restitution of nearly $5 million to automakers who were defrauded in connection to their purchase of defective Takata airbags, and an additional about $3.5 million to all automakers who purchased defective airbags.

In July 2017, the court appointed a Special Master to oversee that fund. In December 2017, the Special Master announced that he had launched an $850 million restitution fund for automobile manufacturers that had purchased Takata airbags from Takata and its subsidiaries. He added he was going to send notice to more than 50 automakers around the world that had purchased airbags subject to recall programs, and that could be eligible for restitution.

In April 2018, a federal judge approved the plan. Toyota is set to receive the largest share of the fund, at $141.3 million. Volkswagen is second in line at $123.7 million, and Honda Motor Company, which was the automaker most affected by the Takata recalls, will receive $121.6 million.

General Motors, Fiat Chrysler, and Ford were next on the list, receiving $86.9 million, $51.9 million, and $43.7 million, respectively.

Takata Air Bags May Explode and Cause Serious Injuries

So far, defective Takata airbags have allegedly been linked with 23 deaths worldwide and nearly 200 injuries. At issue was the airbag inflator, which was powered by “ammonium nitrate,” a fuel that can become unstable with age, and with exposure to high temperatures and high humidities.

When that happens, the airbag, instead of deploying correctly, explodes in an accident, sending shrapnel into the interior of the vehicle. Drivers and other occupants have suffered from knife-like wounds, some of which caused life-threatening bleeding. Other injuries have included vision and hearing loss, lacerations, disfigurement and scarring, and more.

Takata recalls have affected more than 37 million vehicles in the U.S., and more than 49 million inflators. Takata is now in the process of selling its businesses to Key Safety Systems.

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