Who Should Foot The Bill For Millions Of Repairs Because Of Defective Takata Airbags?

So far this year, 10 automakers have recalled more than 19 million vehicles for potentially defective Takata airbags. While there’s no doubt that those vehicles must be repaired, a raging debate is beginning to form regarding just who should foot the bill for the millions of replacement airbags and loaner cars provided to affected customers.

The Washington Post reports that the issue of who should pay to fix the vehicles recalled for airbags that can spew pieces of metal at drivers and passengers wouldn’t normally pose such a problem.

In most recall cases, car manufacturers are required to pay to fix their products. But the issues surrounding the Takata airbags are somewhat of a new phenomena.

The airbags, while found in a plethora of vehicles made by various automakers, were actually made by someone else – Japanese auto parts maker Takata Corp. – and just installed by the manufacturers.

Industry analysts tell the Post that costs should be determined by who is responsible for the recall in the first place.

“If a supplier produces a defective part that doesn’t meet the manufacturer’s requirements the supplier will be charged for the recall,” Karl Brauer, senior analyst at Kelley Blue Book tells the Post.

For its part, Takata – which makes one-in-five airbags worldwide – has maintained that the responsibly for the recall lies with the automakers. Additionally, Takata says that at this point, it’s not exactly sure what is causing the airbag explosions that have been linked to the deaths of five people and injuries of countless others.

Officials with Takata and the affected vehicle manufacturers declined to comment on the issue of footing the potentially massive bill which would include new parts, labor, inconvenience of the recall and any loaner cars borrowed by consumers while their cars are in the shop.

The Post reports that the crux of the issue could come to rest on the contracts put in place between Takata and automakers.

But if that’s not the case, University of Richmond law professor Carl Tobias tells the Post, that the issue could come down to litigation.

“If Takata really bears the lion’s share of responsibility, it may be cheaper, better for its reputation, and better for its future relationship with manufacturers, to absorb the recall cost or pay for most of it,” he says.

But at the same time, lawyers specializing in dispute management tell the Post, that it might be in manufacturers’ best interest to bear responsibility.

“The automaker will want to be seen to be taking responsibility for its product, even if it is ultimately able to recover the cost of the recall from another party,” Peter Shervington, a London dispute management lawyer says.

Still, Jayne Conroy, a New York-based leading products liability lawyer, tells the Post that automakers could be further motivated to absorb some costs of the recall as they recognize they too bear legal liability for the issues.

““There’s no way a company like Takata is completely responsible,” Conroy said. “We will find out that those car manufacturers told Takata exactly the size of the air bag component that needed to be put into the car, exactly what it should weigh. We will find ways that the car manufacturers are actually dictating to Takata what that product ought to look like.”

Regardless of Takata and manufacturer’s current stance on responsibility and absorbing the costs of the recall, more could come to light in the next several months as the National Highway Traffic Safety Administration finishes its investigations into the deadly defect.

As defective air bags result in millions of auto recalls, who pays? [The Washington Post]

by Ashlee Kieler via Consumerist