Toyota agrees to $1.1 billion recall settlement
Toyota has agreed to pay about $1.1 billion to settle a class action lawsuit launched by US vehicle owners affected by a series of mass recalls, the Japanese automaker says.
Toyota did not accept any blame but agreed to compensate owners who argued that the value of about 16.3 million vehicles took a hit from dozens of deadly accidents allegedly caused by Toyota vehicles speeding out of control in 2009.
The deal will cover the cost of installing a free brake override system in about 2.7 million vehicles.
It will also provide cash payments to those who sold their vehicles in the wake of the recalls or who own vehicles ineligible for the override system.
Once lauded for its safety standards, Toyota was forced into damage control mode in recent years after recalling millions of vehicles over a series of serious defects.
Earlier this year it added two models to the controversial 2009-2010 recalls launched after it was discovered that floor mats were trapping the accelerator pedals.
Toyota's mishandling of the initial problem and other reports of sudden, unintended acceleration led to a US congressional probe, more than $50 million in fines from US regulators and public apologies by its chief.
Just two weeks ago, the company agreed to pay a record $17.35 million fine for failing to promptly notify US authorities that the floor mats could also be trapped under the accelerators of 2010 Lexus models.
Toyota has worked hard to regain its reputation for safety, while at the same time fighting off the impact of the economic crisis, a strong yen and the devastating 2011 quake-tsunami disaster.
The settlement helps Toyota avoid a lengthy and risky court battle with angry owners who also argued that Toyota's technology -- not the trapped floormats -- were behind the deadly instances of sudden, unintended acceleration.
"This was a difficult decision -- especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota's electronic throttle control systems," Christopher Reynolds, Toyota Motor North America's chief legal officer, said in a statement.
"However, we concluded that turning the page on this legacy legal issue through the positive steps we are taking is in the best interests of the company, our employees, our dealers and, most of all, our customers."
Earlier Wednesday Toyota forecast a 22 percent jump in worldwide sales this year to 9.7 million units, driven by surging demand that may help it regain the top spot in the global auto market.
Those figures could put Toyota ahead of General Motors and Volkswagen as the world's biggest automaker, a title it held between 2008 and 2010 but lost last year after a slump in sales and production.
Japan's biggest automaker also said it expects to sell about 9.91 million vehicles in 2013, up two percent on-year.
The settlement, which was filed in a California federal court Wednesday, must still be approved by a judge.
It includes $250 million for owners who've sold their vehicles, $250 million for owners whose vehicles are ineligible for the brake override system and $30 million for safety research.
Toyota will also provide free repairs for certain components linked to the recall.
Toyota said it would take a $1.1 billion charge to cover the estimated costs of the settlement and two other cases.
A lead attorney for the plaintiffs told the Wall Street Journal that Wednesday's deal could end up costing Toyota as much as $1.4 billion.