Airbag Settlement to Result in $553M Payment By Four Automakers

Four major car manufacturers have agreed to a $553 million settlement to resolve claims stemming from the Takata airbag recall, which was issued after it was discovered that the airbags may overinflate and rupture, causing metal debris to fly into the passenger compartment of vehicles. 

The airbag settlement includes BMW, Mazda, Subaru and Toyota, addressing product liability lawsuits filed over the use of Takata airbag inflators, which have been centralized in federal court in Florida as part of a multidistrict litigation.

The recalled airbags may unexpectedly explode under certain conditions, such as high humidity, causing the airbag to over-inflate and send shrapnel flying into the passenger compartment of the vehicle. An investigation by the National Highway Transportation Safety Administration (NHTSA) has suggested that ammonium nitrate based propellants used in the inflators may cause the airbag explosions and that the chemical may not be safe for inflator designs.

The rupturing Takata airbag inflator recalls are the largest and most complex recall to ever hit the auto industry. The NHTSA indicated in early December that the number of vehicles set to be recalled over the next three years could reach between 64 and 69 million, following scientific based studies to determine whether the non-desiccated phase-stabilized ammonium nitrate (PSAN) used in Takata airbag inflators are safe.

This settlement addresses the claims specifically against these auto manufacturers by plaintiffs who say that the recall lowered the resale value of their cars. The money is also intended to help speed up repairs and replacement airbags for 9.2 million Toyota vehicles, 2.6 million Subaru vehicles, 2.3 million BMW vehicles, and 1.7 million Mazda vehicles affected by the recall, according to a report published by Law.com.

It will also reimburse the owners for out-of-pocket expenses, provide rental cars to some awaiting repairs, and could also give owners an additional $500.

Takata has already reached a $1 billion settlement with the Department of Justice over criminal charges linked to the recalls. In addition, Takata could face charges of wire fraud for putting out false and misleading information about the airbags, which have been linked to 11 deaths and at least 184 injuries in the U.S. alone. None of the settlements proposed so far resolve civil airbag recall lawsuits filed by consumers who were injured or lost loved ones to the exploding airbags.

Takata is currently in a settlement agreement with the NHTSA, following a November 2015 consent order. The agreement requires Takata to cooperate with the agency in all future actions involving the recall investigation, and demands that the NHTSA be head controller of the recall campaigns in the U.S., granting the agency exclusive control in organizing and prioritizing the recall process to speed up the repairs. In addition, the NHTSA fined Takata $200 million.

Nearly every major automaker has been impacted by the recalls, including Honda, General Motors, Ford, BMW, Mercedes Benz, Volkswagen, Nissan, Mitsubishi, Chrysler (FCA), Mazda, Toyota, and various others.

The potential deal comes as Takata and other parts suppliers struggle to repair tens of millions of defective airbag inflators that have been recalled over the last two years.

As the recall programs commenced in late 2014, both Takata and the impacted auto makers fell far behind in planning and coordinating recall repairs, as the number of impacted vehicles grew by the millions nearly every month.