Ford (NYSE: F) has agreed to a settlement regarding the Takata airbag controversy for (at least) $299.1 million. Ford reached the proposed settlement after a few weeks of negotiation, though it still must be approved by judge Federico A. Moreno of the US District Court for the Southern District of Florida in Miami.
More than three years ago, drivers sued Takata, Ford, and other car makers over faulty airbag parts. Takata inflators were able to explode without much force, spewing metal parts into drivers and passengers. At least 23 people have died worldwide because of this problem. The settlement does not cover personal injury or property damage claims and instead only covers economic issues such as costs related to towing/storing affected vehicles, car rental, and wages lost during the recall process. Ford also agreed to fund a rental-car program and simultaneously start an outreach program to repair the recalls. It is estimated that more than 42 million vehicles were included in the recall. The settlement of $229.1 million is estimated to cover about 6 million vehicles, nowhere near even half of the affected vehicles. Under this deal, each owner is eligible for reimbursement of up to $500 for documented expenses. Court records also indicated that attorneys will receive no more than 25% of the settlement amount.
This Takata airbag recall is the largest in history and is what forced the company to file for bankruptcy in 2017 after consumers and accident victims filed lawsuits. However, Ford is not the only automaker to be hit with a lawsuit. Last year, Toyota Motor Corp. (NYSE: TM), Subaru Corp. (TYO: 7270), Mazda Motor Corp. (TYO: 7261), and BMW AG (ETR: BMW) settled a $533 million agreement, while Nissan Motor Co. (TYO: 7201) reached a $98 million settlement that same year. Shares in Ford fell after the settlement announcement and are currently trading at $10.56 per share. There is no indication if Ford plans to reimburse all affected customers, but this is a step towards removing affected vehicles off the road.