Dana pays $25 million to Toyota to settle Tacoma claim
DETROIT | Wed Jan 12, 2011 5:29pm EST
(Reuters) - Auto parts manufacturer Dana Holding Corp (DAN.N) will pay $25 million to Toyota Motor Corp (7203.T) as part of a settlement for Tacoma truck frames that rusted out and had to be covered by warranty.
Maumee, Ohio-based Dana sold the plants that manufactured the Tacoma frames as part of a March 2010 asset sale to Metalsa, a subsidiary of the privately held Mexican industrial group, Grupo Proeza.
The auto supplier said its payment to Toyota would result in a $25 million charge to fourth-quarter earnings.
In 2008, Toyota was forced to extend the warranty terms for Tacoma trucks manufactured from 1995 to 2000.
In 2009, the Japanese automaker recalled about 110,000 Tundra pickup trucks in cold weather states because of the risk that exposure to road salt could cause corrosion on part of the frame. The frame on those trucks also was built by Dana.
Toyota was Dana's second-largest auto customer in 2009, the most-recent year for which data is available.
Toyota accounted for up 6 percent of Dana's sales from continuing operations that year, topped only by Ford Motor Co (F.N) at 20 percent.
Dana supplies axles, driveshafts and aftermarket parts for autos, commercial trucks and heavy-duty construction equipment.
The company said separately on Wednesday that it expected to post a 10 percent revenue gain in 2011, in line with the growth projected in its global markets.
Preliminary results for 2010 showed Dana had revenue of $6.1 billion and income from continuing operations of about $115 million.
(Editing by Carol Bishopric)
