WARRANTY OBLIGATIONS

Expected warranty costs for products sold are recognized principally at the time of sale of the product based on an estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, production changes, industry developments and various other considerations. The estimated costs related to product recalls based on a formal campaign soliciting return of that product are accrued at the time an obligation becomes probable and can be reasonably estimated. These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. Aptiv has recognized its best estimate for its total aggregate warranty reserves, including product recall costs, across all of its operating segments as of September 30, 2018. The Company estimates the reasonably possible amount to ultimately resolve all matters in excess of the recorded reserves as of September 30, 2018 to be zero to $15 million.

The table below summarizes the activity in the product warranty liability for the nine months ended September 30, 2018:



	Warranty Obligations

	(in millions)
Accrual balance at beginning of period	$	58
Provision for estimated warranties incurred during the period	31
Changes in estimate for pre-existing warranties	7
Settlements made during the period (in cash or in kind)	(43		)
Foreign currency translation and other	—
Accrual balance at end of period	$	53

In September 2016, one of the Company’s OEM customers initiated a recall to enhance airbag deployment systems in certain vehicles. Aptiv’s Advanced Safety and User Experience segment had supplied sensors and related control modules for the airbags in the affected vehicles. During the first quarter of 2017, Aptiv reached an agreement with its customer related to this matter and recognized an incremental $43 million of warranty expense within cost of sales during the nine months ended September 30, 2017.