Dana Corp ordered to pay Toyota $25m for frame rust issues
Dana is best-known for their rear differentials and axle assemblies but for the 1995-2000 Toyota Tacoma, Dana provided the frame that was found to rust excessively, causing Toyota to issue a recall on 110,000 pickups built during those six model years. This recall affected mostly those who lived in areas with harsh winters and the rust problem was accelerated by the use of road salt.
Toyota was Dana Corp’s second largest customer in 2009, with 6% of their business coming from the Japanese automaker; second only to the 20% of business that Ford Motor Company provides. This $25 million payment will be charged against the earnings of 4th quarter of 2010 and while it sounds like a tremendous amount of money, Dana reported $6.1 billion in revenue during 2010 – meaning that the $25 million fine is likely only a small portion of the money made off of Toyota throughout their relationship.
Dana Corp sold the plants responsible for the faulty Toyota Tacoma frames that were affected by the recall in March 2010 but as part of the settlement between the two over the frame rust recall issue, Dana will shell out the cash as the plants were in their ownership when the problematic parts were produced.
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