Exploding Airbag Settlement Could Cost Over $1 Billion

Japan’s Takata could be close to settlement with the US Department of Justice over its massive exploding-airbag recall in what would amount as the largest exploding airbag settlement ever.

The company is expected to pay up to $1 billion to resolve allegations of criminal wrongdoing in handling its faulty airbags, the Wall Street Journal reported on Wednesday.

But the final figure could be in the high hundreds of millions of dollars, the Journal reported, citing people familiar with the matter.

One point that remains unresolved is whether there will be any guilty plea to criminal misconduct, either by the company or one of its subsidiaries as part of the exploding airbag settlement.

Such a plea would be an escalation of punishments against auto companies for defective products. In settlements with General Motors and Toyota Motor, for example, the companies agreed to pay large fines over product defects, but did not plead guilty.

Any broad agreement between Takata and the Justice Department would end one chapter in a long-running saga that has enraged drivers, disrupted the auto industry and brought the company to the brink of bankruptcy. While Takata still faces drawn-out legal battles, including a large product defect lawsuit, it would no longer be under the cloud of a government investigation.

Takata’s exploding airbags have been linked to at least 11 deaths and more than 180 injuries in the United States. Nineteen automakers are recalling 42 million vehicles to replace the airbags’ metal inflaters. The inflaters can over-pressurize and rupture, shooting metal shards into a car’s cabin.

The Justice Department has been examining whether the company made misleading statements and hid information about the defective airbags from clients. Takata has already acknowledged that it manipulated airbag test results, but has said that its conduct was unrelated to the airbag ruptures.

Former Takata engineers have said that cost considerations drove the company to switch to a less expensive yet problematic propellant in its inflaters in the early 2000s. The propellant, ammonium nitrate, can break down over time, making it unstable and prone to unexpected explosions when exposed to moisture.