Toyota has announced it has reached an agreement to settle outstanding lawsuits in the US related to the automaker’s previous recalls for unintended acceleration.
In one of the largest lawsuits of its kind, the Japanese automaker will reimburse owners of up to 16-million cars resulting in a one-time, $1.1 billion pre-tax charge against its fourth quarter earnings. Also, under the agreement, Toyota will install a brake-override system in cars where the floor mats got stuck.
In addition, the automaker is setting up a fund of $250 million to be paid to former Toyota owners who sold their vehicles from September 1st, 2009 to December 31st, 2010. A separate fund of $250 million will also be established to compensate current owners whose vehicles are not eligible for the new brake-override system.
All 16-million owners involved in the class action lawsuit will also get a new customer care plan, providing warranty on certain parts tied to unintended acceleration for between three to 10 years.
“This agreement marks a significant step forward for our company, one that will enable us to put more of our energy, time and resources into Toyota’s central focus: making the best vehicles we can for our customers and doing everything we can to meet their needs,” said Christopher P. Reynolds, group vice president and general counsel, Toyota Motor Sales, U.S.A, and chief legal officer, Toyota Motor North America. “In keeping with our core principles, we have structured this agreement in ways that work to put our customers first and demonstrate that they can count on Toyota to stand behind our vehicles.”
While seen as an admission of guilt, Toyota’s settlement legally does not mean as much, with Reynolds adding, “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. 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.”