After Faulty Takata Airbags, Toyota Agrees to Address Rusty Trucks
Toyota Motor Corp (ADR) (NYSE:TM) has endured another embarrassing situation. After confronting a notorious problem—and related recall—of cars equipped with faulty airbags (made by a supplier), it has more buyer complaints to appease. Indeed, Toyota has agreed to compensate owners of some of its SUVs, which were found to have a tendency to rust. The vehicles were insufficiently protected against oxidation (rust).
Thus, Toyota will end up having to fork out some $3.4 billion in compensation to plaintiffs. Owners complained that rust affected the chassis of their trucks to such an extent that it damaged the integrity of the vehicles. This would have compromised the truck and the safety of the occupants. (Source: “Toyota will settle truck frame rust suit for up to $3.4 billion,” Autoweek, November 14, 2016.)
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The latest lawsuit against Toyota covers 1.5 million vehicles, mainly pickup trucks and SUVs such as the “Tacoma” (2005-2010), the “Sequoia” (2005-2008) and the “Tundra” (2007-2008).
It will cost Toyota nearly $15,000 per vehicle to replace the affected parts. Moreover, the company, which is the world’s largest automaker, must inspect vehicles that were purchased or leased within the past 12 years to determine whether the owners will receive a replacement or a refund. (Source: Ibid.)
The rusty truck debacle follows another, perhaps even more visible, case at Toyota involving faulty airbags. Just a few weeks ago, Toyota announced the recall of about 5.8 million cars in Japan, China, and Europe due to a risk associated with airbags provided by Takata Corporation (TYO:7312).
Some of these are the same ones that were involved in a previous recall dating back to 2010. This brings the overall number of vehicles affected to over 23 million. (Source: “Toyota’s recall over risky Takata airbags rises above 23 million cars,” CNN, October 26, 2016.)
Facing the threat of heavy fines, the airbag’s manufacturer, Takata, had to declare an ever increasing number of products as defective. (Source: “Why the Takata debacle is the messiest recall in the U.S.,” Driving, November 16, 2015.)
Credits: Flickr.com/Mike Mozart
The manufacturing of these airbags incorporates a chemical compound which has shown a tendency to explode with excessive force after prolonged exposure to high temperatures. It has been blamed or linked to the deaths of 16 people worldwide, although most were in the United States. Takata supplies several manufacturers, but Toyota was apparently slow to respond. (Source: Ibid.)
Takata controls 20% of the automobile seat belt and airbag market. It has been embroiled in proceedings over its faulty airbags for the past three years, involving some 100 million vehicles from many different manufacturers.
