Toyota Agrees US$1.6bn Payment to Settle Faulty Accelerator Suit

A US federal judge has approved a US$1.6bn settlement in a class-action lawsuit against Toyota to compensate vehicle owners who suffered financial losses after widespread reports of sudden, unintended acceleration in 2009 and 2010.

Owners who sold their vehicles at a loss through trade-ins and resale will receive between US$125 and US$10,000, depending on the level of depreciation. The settlement follows several years of allegations of mechanical and electronic defects, but does not cover individual personal injury and wrongful death lawsuits that 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 Sales, USA. The motor group will take a one-time US$1.1bn charge to its earnings cover the settlement costs.

James Selna, US district court judge of the central district of California, who presided over the suit since 2010 after reports of complaints and accidents related to unintended acceleration, granted final approval after the terms were proposed in December.

The settlement is “extraordinary because every single dollar in the cash fund will go to claimants,” he said in a statement. A decision posted to the court’s website calls the settlement “fair, adequate and reasonable.”

Toyota is required as part of the agreement to install safety upgrades in about 3.2m vehicles. The company will establish two funds of US$250m to compensate owners not eligible for safety upgrades and those who sold their cars between September 2009, and December 2010 at a loss.

The settlement also requires Toyota to pay US$30 million for automotive safety research on driver behaviour and unintended acceleration. It would also provide a customer support programme for more than 16m current Toyota owners, who will be eligible for free repairs on certain parts for up to 10 years.

The sudden acceleration problems marred Toyota’s reputation for quality. The company eventually recalled more than 11m vehicles in connection with problems including floor mats that caused the accelerator to get stuck.


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