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2-min read

Honda Reaches $605 Million US Settlement Over Takata Air Bags

In January, Takata agreed to plead guilty to criminal wrongdoing and to pay $1 billion to resolve a U.S. federal investigation into its inflators.


Updated:September 2, 2017, 4:10 PM IST
Honda Reaches $605 Million US Settlement Over Takata Air Bags
Honda logo (Image: Reuters)

Honda Motor Co said it agreed to a $605 million so-called economic loss settlement on Friday covering up to 16.5 million U.S. vehicles with potentially faulty Takata air bag inflators.

The settlement covers several forms of economic damages linked to the inflators, including claims that vehicles were inaccurately represented to be safe, and that buyers had overpaid for cars with defective or substandard air bags.

It also covers out-of-pocket costs, including lost wages and child care costs, Honda owners may face, or already have incurred, to get vehicles equipped with the Takata air bag inflators repaired.

The Japanese automaker joins other major automakers that have reached similar settlements, and agreed to take additional actions to try to help speed recall repairs of vehicle inflators that can potentially rupture and cause serious injuries or deaths. Five other automakers have reached similar settlements worth about $650 million in total.

At least 18 deaths and 180 injuries worldwide have been tied to the defect that led Takata Corp to file for bankruptcy protection in June. Takata inflators can explode with excessive force, unleashing metal shrapnel inside cars and trucks. All but one of the deaths have been in Honda vehicles.

To date, 19 automakers have recalled more than 42 million vehicles in the largest auto safety callback in history. Takata expects 125 million vehicles worldwide will eventually be recalled due to its defect-prone inflators.

Honda said the settlement covers 11.4 million vehicles currently under recall and 5.1 million more vehicles that may be recalled later.

Last month, Nissan Motor Co agreed to pay $97.7 million to settle economic claims over the recall of 4.4 million vehicles.

In June, a federal judge in Miami granted preliminary approval to settlements with Toyota Motor Corp, Subaru Corp, BMW AG and Mazda Motor Corp totalling $553 million and affecting 15.8 million vehicles with Takata inflators.

The automaker settlements reached so far include the creation of an outreach programme to contact owners of recalled vehicles and help address the low number of completed repairs, as well as compensation for economic losses including out-of-pocket expenses.

Some settlements also include a possible residual distribution payment of up to $500, rental car payments for some owners, and a customer support programme for repairs and adjustments, including an extended warranty.

In January, Takata agreed to plead guilty to criminal wrongdoing and to pay $1 billion to resolve a U.S. federal investigation into its inflators.

As part of the Justice Department 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 air bags who had not already reached a settlement.

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| Edited by: Ayushmann Chawla
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