Honda to Pay $85M Settlement Over Takata Airbag Scandal

Honda Motor HMC has agreed to pay $85 million to settle a probe over defective Takata airbag inflators in some of its vehicles. The settlement concludes an investigation into the Japan-based automaker’s alleged failure to inform regulators and customers about the risk of explosion of the frontal airbag systems installed in some of its cars.

The airbag system was designed by Takata Corp. Notably, Takata used ammonium nitrate to create small explosions for inflating the airbags. However, the chemical can deteriorate over time due to fluctuating temperatures and high humidity. It can burn too fast and blow apart a metal container, hurling shrapnel into drivers and passengers. At least 25 people have been killed worldwide by injuries inflicted by the defective Takata airbag inflators.

Notably, Honda has recalled nearly 13 million Honda and Acura vehicles equipped with defective inflators. The Takata inflator scandal has triggered massive recalls by various other automakers including Toyota Motor TM, Ford F, General Motors GM, Daimler AG, BMW AG, Fiat Chrysler, Ferrari, Mitsubishi, Subaru, Volkswagen, Mazda, Audi and Nissan.

The latest settlement will ensure that Honda implements new safety protocols to protect passengers and drivers. The company will not only replace all the remaining defective airbags but also upgrade airbag safety procedures to minimize the risk of rupture. Under a separate class action settlement, Honda customers are entitled to compensation for damages and injuries as a result of the faulty airbags. Honda recently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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