These 3 Automakers Will Pay the Piper for Vehicle Defects


Mistakes by automakers often end up leading to costly recalls or, in the worst cases, lawsuits following deadly crashes or personal injuries. As October drew to a close, three of the world’s leading automakers had their day in court and each admitted defeat on some level, settling claims over faulty products and a wrongful death, while an electric vehicle maker escaped investigtation. Here’s the rundown on a busy week of automotive lawsuits.

Toyota loses on unintended acceleration 

Despite the terrible press and $1.1 billion class-action suit payout following Toyota’s (NYSE:TM) unintended acceleration issues, the Japanese automaker has emerged with mainly surface wounds from the defects in its automobiles. That trend took a turn for the worse when Toyota agreed to pay $3 million to settle a suit involving a crash by an Oklahoma woman that killed a passenger, CNN reports.

The settlement did not force Toyota to acknowledge wrongdoing, which the automaker continues to deny, but the jury declared Toyota was “reckless” in its regard for public safety as it pertained to the defective accelerator. The automaker had won two cases involving personal injury stemming from the operation of Toyota vehicles. Some 700 cases are still pending, which spells tremendous worry should the losses continue.

Ford concedes on Super Duty Navistar engine 

Because of the long life of an automobile, manufacturers have a lot riding on every product release. In the case of Ford’s (NYSE:F) Navistar 6-liter V8 engine, the Dearborn automaker has conceded defeat. Automotive News reports Ford agreed to terms ending the class-action lawsuit overover the Navistar engine used in Super Duty pickups and E-Series vans from model years 2003 t0 2007.

The defective engine sent buyers of these Ford vehicles to the repair shop in droves, and Ford will reimburse owners for half the deductible paid on the repair and will allow some to claim as much as $825 in money spent fixing the Navistar, Automotive News reports. That engine no longer turns up in any Ford vehicles, as the automaker delivered a superior solution following the disastrous relationship with Navistar. Ford will emerge without owing a great deal monetarily, though it will sting as far as industry reputation is concerned.

Honda failed on over 1.5 million vehicles 

Widespread, multi-model manufacturing defects are the biggest source of consternation for an automaker. In the case of Honda (NYSE:HMC), the automaker has a mess on its hands that involves 1,593, 755 vehiclesAutomotive News reports. The Accord, Odyssey, and two other models had defects in the powertrain that caused them to burn oil unreasonably fast. According to the report, Honda has agreed to settle on the class-action suit.

Five model years of the Accord and six model years of the Odyssey are covered in the suit, which did not involve a recall but was so widespread that it will be damaging for Honda. The automaker will extend the warranty of the vans and cars while reimbursing owners who had to replace spark plugs and other parts stemming from the defective powertrain, Autoblog reports.

Tesla escapes fire unscathed 

When a Tesla (NASDAQ:TSLA) Model S caught fire after ramming a metal object on the road, the event shook the auto world. However, the National Highway Traffic Safety Adminstration concluded the fire was not a result of manufacturer defects or another type of violation of safety standards. Tesla CEO Elon Musk has said as much in a blog post on the automaker’s site, yet the validation should calm the fears of investors.

On that front, Tesla’s meteoric rise appears to have run its course. Shares are down 8 percent since early October, when investors were at their most bullish. Tesla may have saved its reputation in the short run, but the unveiling of the Model X and every other bit of news until that late 2014 event will test the current price of $170.

In a busy week of auto litigation news, Toyota and Honda were losers, with Ford losing to a lesser extent. Tesla appears to have jumped the shark.

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