• by Tanya Gazdik , Staff Writer, February 28, 2017

It’s the story that keeps on growing. It was expected that a settlement would be finalized Monday regarding Japanese auto parts maker Takata Corp. and its faulty airbags.

In response to the U.S. Justice Department’s criminal investigation, the company pleaded guilty to fraud and agreed to pay $1 billion in penalties for concealing a deadly air bag defect blamed for at least 16 deaths, most of them in the U.S., and 180 injuries worldwide.  

Instead of the case drawing to a close and the issue quietly fading away, a new development was revealed when plaintiffs' attorneys in a civil lawsuit charged that five automakers knew the devices were dangerous but continued to use them for years to save money. The allegations were made in a “status report” filing in Miami federal court, which is a clearinghouse for pretrial evidence in dozens of lawsuits against Takata and automakers.

The automakers being accused are Honda, Toyota, Nissan, Ford and BMW.

It could shake out like the O.J. Simpson case — the automakers could still be found guilty and financially liable in the civil case, even though they were found not culpable in the criminal case. 

In pleading guilty, Takata admitted hiding evidence that millions of its air bag inflators can explode with too much force, hurling lethal shrapnel into drivers and passengers. The first recalls of Takata’s airbags took place when Honda recalled 4,000 vehicles in 2008. The problem touched off the biggest recall in U.S. automotive history, involving 42 million vehicles and up to 69 million inflators.

The auto companies have asserted since the beginning that they were deceived by Takata and shouldn't be held liable. In Takata's plea agreement, the Justice Department says Takata got the automakers to keep buying its inflators "through submission of false and fraudulent reports and other information that concealed the true and accurate test results.”

The plaintiffs, who could gain from suing the deeper-pocketed automakers along with Takata, are making specific allegations against each of the automakers, including that Honda, Takata's biggest customer, was intimately involved in designing Takata inflators, and two of them exploded and ruptured at Honda facilities in 1999 and 2000.

Honda, the only one of the automakers to issue a statement, vehemently denies the accusations. When it installed Takata’s airbags, it said in a statement, “Honda reasonably believed, based on extensive test results provided by Takata, that they were safe.” 

Honda said it believed it reacted “promptly and appropriately” in handling known airbag defects. It also said Takata’s airbags had not necessarily been cheaper than those of its competitors. “Sometimes they were more expensive, sometimes less,” the carmaker said.

The filing also cites internal documents from Ford, Nissan and Toyota indicating that cost considerations influenced the automakers’ decision to use Takata’s airbags, despite safety concerns. Also accused is BMW, pointing to circumstantial evidence that BMW was similarly involved in what federal prosecutors, in their criminal complaint and in announcing the Takata guilty-plea agreement, have called a coverup. But BMW has so far refused to submit documents in the case, the filing says.

One analyst group says the automakers don’t have anything to worry about. 

“At a very high level, we don't expect the settlement to have an impact on perception or consideration,” said Jon Poon vice president, automotive division at Phoenix Marketing International, which regularly takes the consumer pulse, gauging sentiment among in-market car shoppers. “Since the Takata recall broke, the movements we did see was minor and short-lived. Given the number of brands now affected we can't imagine it will have much impact.”

A recall is one thing, but an alleged coverup is another thing all together. Time will tell if the automakers’ reputations are negatively impacted.