Toyota Motor agrees to settle federal class action suit for $3.4 bn

Toyota Motor Corp has agreed to settle a federal class action suit brought by US owners of pickup trucks and SUVs for $3.4 billion, lawyers for the plaintiffs said in court papers. The vehicles had frames  that would rust.

The proposed settlement pertains to 1.5 million Tacoma compact pickups, Tundra full-size pickups and Sequoia SUVs that had deficient rust protection which could lead to corrosion serious enough to jeopardise their structural integrity, according to court papers.

According to estimates of attorneys for the plaintiffs who supported the settlement, the value of frame replacements worked out to $3.375 billion on the basis of a cost of about $15,000 per vehicle while inspections were estimated at around $90 million at $60 per vehicle.

The carmaker has however, not admitted any liability or wrongdoing in the proposed settlement filed on Wednesday before US district judge Fernando Olguin in Los Angeles.

''We want our customers to have a great ownership experience, so we are pleased to resolve this litigation in a way that benefits them and demonstrates that we stand behind the quality and reliability of our vehicles,'' Toyota said in a statement.

Toyota would inspect the vehicles for 12 years from the day they were first sold or leased to determine whether frame replacement was required at company expense and reimburse owners who previously paid for frame replacement, under the settlement.

According to commentators, the agreement was a substantial financial setback for the company at a time when the Japanese auto giant's performance has slowed considerably, partly due to a strong yen. The company also finds itself in a group of auto makers facing stagnating sales in the profitable US market.

The deal, filed in US District Court in Los Angeles this week, settles litigation in two states over problems with Toyota Tacoma trucks from model years 2005 to 2010, Tundras from 2007 to 2008 and Sequoias from 2005 to 2008.