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VW to recall 4.86 million cars in China

Volkswagen AG will recall 4.86 million vehicles due to issues with air bags supplied by bankrupt auto parts maker Takata Corp, China’s quality watchdog has said today.

Reuters reports that Volkswagen and its Chinese joint venture FAW-Volkswagen and SAIC Volkswagen delivered 3.98 million vehicles in China last year.

The recall comes after the watchdog asked the German automaker, General Motors Co (GM.N) and Daimler AG’s Mercedes-Benz earlier this year to recall vehicles equipped with Takata air bags.

Over 20 million cars in China had air bags made by Takata, the watch dog has estimated.

The airbags which have been linked to at least 16 deaths and 180 injuries globally, and have the potential to explode with too much force and spray shrapnel.

China’s General Administration of Quality Supervision, Inspection and Quarantine said across all of VW’s Chinese operations, it would be required to recall over 5 million vehicles.

The watchdog said the recall would begin in March next year and continue into 2019.

Volkswagen officials did not provide immediate comment when contacted by Reuters.

Of 37 vehicle manufacturers affected by the faulty air bag issue in China, 24 had recalled 10.59 million cars as at the end of June. A further five had made plans to recall 1.26 million vehicles.

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Honda confirms Takata death

Honda has confirmed an 11th death in the US involving a faulty Takata airbag inflator.

This now means at least 17 deaths and 180 injuries worldwide are now tied to the defect. Vehicles manufactured by Honda have been responsible for all but one of the deaths.

The car maker said the incident occurred in Florida in June 2016, when an individual was repairing a 2001 Honda Accord and the airbag ruptured. The victim died a day after sustaining injuries when the airbag spontaneously deployed.

The Honda Accord was one of over 300,000 vehicles still on US roads that were yet to receive repairs. Honda said the vehicle’s registered owners had received at least 12 recall notices, but never brought the vehicle in for repairs, Reuters reports.

Takata filed for bankruptcy last month, and the chief operating officer of the supplier’s US unit, Scott Caudill, said the company faces “insurmountable claims” relating to the recalls.

Caudill said that Takata has recalled, or expects to recall, 125 million vehicles worldwide by 2019.

In New Zealand, over 110,000 affected vehicles have been identified, which includes both new and used cars. As of March this year, just 22 per cent of owners have been told a replacement is available.

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Takata to file for bankruptcy

A faulty Takata air bag inflator

Japanese air bag maker Takata Corp is preparing to file for bankruptcy as soon as next week, while the company works towards a deal to secure financial backing from American car parts maker Key Safety Systems, Reuters has reported.

The deal with Key Safety has been going on for months, and Reuters claims Key is expected to acquire Takata assets as part of the bankruptcy restructuring.

Nikkei reported a new company created under Key Safety will purchase Takata operations for $2.25 billion and will continue supplying air bags, seat belts and other products to car makers, and leave the legal liabilities behind in a separate entity.

A $1.2 billion settlement between Takata and major global car makers agreed to earlier this year is potentially at stake. The settlement was part of the largest-ever safety recall in automotive history, with 100 million cars affected by the faulty air bag inflators.

The deal between Takata and Key Safety systems may not be reached before the Japanese company files for bankruptcy next week, and major car makers have previously expressed concern that should Takata file for bankruptcy before a deal is in place, it may affect the production of replacement air bag inflators.

A US judge has earlier said the costs of replacing all faulty Takata air bag inflators could exceed $11 billion.

In New Zealand, over 110,000 affected vehicles have been identified, which includes both new and used cars. As of March this year, just 22 per cent of owners have been told a replacement is available.

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Car makers settle Takata lawsuit

Four car makers have agreed to an $800 million settlement to address claims filed in relation to defective Takata airbag inflators, according to court documents filed overnight.

Toyota will cover $403 million of the settlement, followed by BMW at $190 million, Mazda at $110 million and Subaru at $98 million, Reuters reports.

Lawsuits against other leading car makers Honda, Ford and Nissan are yet to be settled.

The four car makers – Toyota, BMW, Mazda and Subaru – said in a joint statement that they settled “given the size, scope and severity of the Takata recall,” but none have admitted fault.

At least 16 deaths and 180 injuries worldwide have been linked to the faulty airbag inflators, which can explode with excessive force and unleash shrapnel inside the cabin of the car. In most instances, the airbags ruptured in humid, high temperatures, and no incidents have been reported in New Zealand.

Reports of the incident led to the largest automotive recall worldwide, affecting 100 million vehicles.

In January, Takata pleaded guilty to criminal charges and paid out a $1.4 billion settlement. Searches for a buyer have stretched on for over a year, and last month, the company reported it was considering bankruptcy.

This latest settlement includes contacting owners who still have the faulty airbags, compensation for economic losses, residual payments, rental cars for some owners, and customer support for repairs.

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Takata stock slumps

Takata stock slumped by as much as 8.8 per cent after a Japanese day trader told his 103,000 Twitter followers that he had sold his shares.

The slump was the biggest intraday decline since November 9 and finished the day down 7.5 percent in Tokyo.

The trader, known as CIS, sold all the Takata shares he’d purchased three weeks ago and estimated that his Takata trade, involving about 800,000 shares, had netted a pretax gain of about $1.2 million.

According to automotivenews.com, Takata had climbed to the highest since January 29 at Tuesday’s close of business.

CIS began his Takata trade when the shares rose, after reports that it’s US subsidiary was planning to file for bankruptcy. “The stock rose even after a piece of really bad news came out,” he told Automotive News. “For me that’s a sign of strong demand.”

he said that he sold the shares because they had stopped rising once a potential sale to Autoliv or Key Safety was beginning to progress.

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