Toyota to pay US customers $1.6-bn for fall in value of cars due to acceleration problems
22 July 2013
Japanese carmaker Toyota Motor will pay $1.6 billion to compensate vehicle owners for financial losses from the fall in the value of their cars after the Japanese firm recalled over 14 million vehicles in 2009 and 2010 over a design defect that caused the car to suddenly accelerate without warning.
A US District judge in California over the weekend approved the $1.6-billion settlement, ending a 2010 class-action lawsuit bought on by Toyota customers after several recalls that led not only to the value of their vehicles plunging, but also led to several crashes and death.
The $1.6-billion settlement is only for loss of vehicle value and safety programs, lawsuits filed by individuals over personal injury and wrongful death, are still pending.
''This agreement allows us to resolve a legacy legal issue in a way that provides significant value to our customers and demonstrates that they can depend on Toyota to stand behind our vehicles,'' said Celeste Migliore, national business and field communications manager for Toyota Motor US.
Toyota said that it will take a one-time $1.1 billion charge to its earnings cover the settlement costs.
As part of the agreement Toyota agreed to install brake-override systems in an estimated 3.25 million vehicles, establish two funds of $250 million to compensate owners not eligible for safety upgrades and those who sold their cars between 1 September 2009, and 31 December 2010, at a loss.
Toyota will also pay $30 million for automotive safety research on driver behavior and unintended acceleration, and initiate a customer support program to more than 16 million of its current customers, who will get free repairs on certain parts for up to 10 years.
Steve Berman, an attorney representing Toyota owners, said that the settlement is the largest in US history involving automobile defects.
''This is a great settlement for consumers, it includes both safety fixes to make Toyota vehicles safer, as well as monetary relief for owners who saw a reduction in their vehicle's value,'' he said.
In the largest recall in its history, Toyota was forced to recall over 14 million vehicles worldwide for defective accelerator pedals that cause the vehicles to accelerate unintentionally.