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Toyota to spend $1.1 billion on unintended acceleration claims

Millions of vehicles to get brake override systems

By AutoWeek Dec 27, 2012 10:20AM

2010 Toyota Camry (© Toyota Motor Sales, U.S.A)

 

 

 

Toyota Motor Corp. is setting aside $1.1 billion to settle various U.S. lawsuits and other claims stemming from reports of unintended acceleration that plagued the automaker in 2009-2010.

 

The company has agreed to install new braking override systems in certain vehicles and reimburse owners who suffered economic losses because of the problems, Toyota said in a statement released Dec. 26. Up to 16 million vehicles are covered by the settlement, and will be given 3- to 10-year warranties for parts related to unintended acceleration, a statement released by the plaintiffs' lawyers said.

 

Plaintiffs' lawyers estimated 3.25 million vehicles would be eligible for new brake-override devices.

 

Toyota, in the settlement of a key piece of class-action litigation pending in U.S. District Court in California, made no admission of fault for the acceleration problems, according to The Wall Street Journal, which reported the agreement.

 

The settlements largely bring to an end the consumer fallout from Toyota's unintended acceleration cases, which beset the automaker for the better part of two years while it grappled with the U.S. recession.

 

"Toyota wants to put its unintended acceleration recalls behind once and for all and as costly as it might be, this settlement will allow them to remove most of the lingering financial uncertainty," said Jesse Toprak, a senior analyst with TrueCar.com.

 

The plaintiffs' lawyers say the settlement -- among the largest ever in the auto industry -- could be valued at $1.2 billion to $1.4 billion. U.S. District Judge James Selna, the federal judge handling the main piece of litigation in California, is expected to review the settlement on Friday.

 

Lawsuits claiming personal injuries and deaths caused by such incidents remain pending, with the first federal trial set for February in Santa Ana, Calif., Bloomberg reported.

 

Toyota has also been fined more than $60 million by the National Highway Traffic Safety Administration for failing to inform U.S. safety regulators in a timely manner of internal information about unintended acceleration.

 

The company has blamed many of the cases on driver error or the misplacement or misuse of floor mats.

 

Toyota's statement

"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," Christopher Reynolds, Toyota's top North American legal officer, said in a statement.

 

"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."

 

NHTSA and NASA engineers investigated the incidents but found no electronic defects in Toyota vehicles.

 

"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," Reynolds said in the 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."

 

Reynolds, in a June interview with Automotive News, mapped out some of Toyota's defense strategy. He said potential trials would call into question Toyota's reputation for engineering and vehicle quality: "I'm not exactly in the position to compromise with anybody over that issue...We're just not going to do it."

 

Toyota said it will offer cash payments to "eligible customers who sold or turned-in their leased vehicles in a period during 2009-2010," as well as other customers, including those who won't receive the new braking system installation.

 

The settlement also includes $30 million to establish more driver education programs and pay for more research into advanced safety technologies.

 

Terms of the settlement include a $250 million fund for former Toyota owners who sold vehicles at reduced prices because of bad publicity, and a separate $250 million fund for owners not eligible for the brake override system.

 

The plaintiffs' attorneys are slated to receive up to $200 million in fees and $27 million in costs, according to court documents.

 

"After two years of intense work, including deposing hundreds of engineers, pouring over thousands of documents and examining millions of lines of software code, we are pleased that Toyota has agreed to a settlement that was both extraordinarily hard-fought and is exceptionally far-reaching," Steve Berman, a lead counsel for the plaintiffs, said in a statement.

 

"From the very start, this was a challenging case, Berman said. "We brought in automotive experts, physicists and some of the world's leading theoreticians in electrical engineering to help us understand what happened to drivers experiencing sudden acceleration. We are extraordinarily proud of how we were able to represent the interests of Toyota owners, and believe this settlement is both comprehensive in its scope and fair in compensation."

 

Total costs

Toyota said the $1.1 billion pre-tax charge would also be used for a possible settlement of civil litigation with Orange County, Calif., and a group of state Attorneys General.

 

The automaker's statement didn't disclose the total costs of the unintended acceleration problems.

 

But those costs ultimately could top $3 billion, the Journal said. In 2010, Toyota released a preliminary estimate saying it could incur global liabilities of $2 billion stemming from the costs of recalls and lost sales, the newspaper said. But that figure didn't include the new settlement or other government fines and related costs.

 

The automaker set up a web site, www.toyotaelsettlement.com, to provide further information on the settlement.


-- Philip Nussel and David Phillips, Automotive News

 

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33Comments
Dec 27, 2012 7:03PM
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"ALL manufacturers try to get away with what they can. NONE of them are going to spend money unless they think they absolutely cannot get away with it."

This is simply not true: mazda repeatedly called me to the dealership where they proceeded to enhance my vehicle "because it might fail down the road" - all at mazda's expense.

Any company which tries to get away with as much as it can, whenever it can, however it can, deserves to go out of business for dishonest business practice.

This, by the way, is how you turn a TOYOTA customer and a long time fan like myself into a strong opponent of the brand. Precisely because of what you wrote above is why I am no longer a TOYOTA customer.
Dec 29, 2012 9:49AM
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You IDIOTS keep buyng Toyota's **** !  They denied this for a year or more,  and settled due to unwanted publicity.  Your precious Toyo isn't the caring company so many of you are brainwashed into thinking they are !!        
Dec 30, 2012 5:52AM
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If you dont believe there is a problem with these cars accelerating or not braking properly then rent a Toyota with the electronic throttle body and ABS, drive it in a safe area with no other cars then go back and forth between the gas and brake pedal and it will either surge forward like you floored it (with no feet on either pedals) or push the brake pedal and watch as the brakes delay before they engage. I am a former Toyota mechanic and have confirmed this on many different vehicles.
Dec 30, 2012 9:41AM
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Pays out millions/billions but admits no fault???  What caused the issue?  The cause is a Toyota design.  Period.  Over rated and over priced.  No one in their right mind would purchase a Toyota with all of the other options on the market - Ford, Hyundai, Honda, Nissan, GM, Chrysler...  Look around people
Dec 28, 2012 5:25AM
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"When will we stop Fiat from reaching its goal of owning 75.1% of Chrysler?"

I do not want to stop FIAT from owning Chrysler - Chrysler was a cheap, dead brand with poor quality vehicles, which is why Mercedes ditched them. But before Mercedes ditched them, Chrysler assimilated as much technology as the intra-company policies allowed - those are the few "Chryslers" that are actually half-decent.

My hope is that Alfa Romeo will finally make it to our shores through Chrysler - and by that I most certainly do not mean or want the "redesigned" Dodge Dart, but a real Alfa Romeo!
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... and I still love my  superior, long-lasting reliable Toyota! (NO SAFETY ISSUES!)

 

 

Dec 27, 2012 10:40AM
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"making the best vehicles we can for our customers and doing everything we can to meet their needs"

WHAT. A. LIE!!!

Where is my diesel Avensis wagon with a manual transmission, then, if you are doing "everything you can to meet customer needs"!?!
Dec 27, 2012 11:49AM
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I'd say that Toyota has gone way above and beyond by offering this settlement. I cannot believe they are even going to offer money to the dorks that sold or turned in their cars out of fear. These are probably the same people that prepped for December 21, Y2K, and a  possible chemical attack on the US by purchasing duct tape and plastic etc.
  This whole things seems rather silly when no one has been able to pin point anything other than a floor mat issue that could have caused the problem. You had US government agency engineers from NASA and the NHTSA that could not find anything wrong with the vehicle's electronics and yet Toyota is going to compensate all of these people for...........nothing.
  While I wish no one to be hurt or killed by anything, the people that had that happen certainly were not intelligent enough to be operating a vehicle to begin with. If you are not smart enough (or informed enough) to either shift the vehicle into neutral, turn the key off or set the emergency brake, they were probably going to hurt someone else by being behind the wheel of a car at some point in the future.
  Anyway, kudos to Toyota for moving to put this behind them, and for being a strong enough company to survive a tsunami, a recession AND a bogus lawsuit, all at the same time. Detroit fat cats should be studying their business methods since none of the big three could have survived that, they barely squeaked through the recession alone.

Dec 27, 2012 1:07PM
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Even though NASA, the NHTSA, and the Detroit automakers could not find any fault on Toyota's part, Toyotya is manning up and shouldering the blame. Not only that, they will be able to pay the settlement in full without American taxpayer financial support. Even more suprising, consumers are so confident in Toyota's products, worldwide, that Toyota is getting ready to overtake GM again and become the number one automaker.  They'd still be number one if the tsunami wouldnt have occured which allowed GM to temporarily take the spot. 

 

Now, when can we expect Ford customers to start suing due to their 1.6L ecoboost engine vehicles losing value due to the engines catching on fire?  When will American taxpayers sue GM for losing at least 12 BILLION dollars in bailout and bankruptcy money? When will we stop Fiat from reaching its goal of owning 75.1% of Chrysler? They currently own 58.5%. 

Jan 4, 2013 7:30AM
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"It is a little difficult to understand why you are not getting better MPG out of this vehicle except for the fact you seem to dislike the Domestics."

I will like "domestics" much better when they offer me the option of buying a fully decked-out clean diesel sportwagon with a manual transmission. Show me one that does and I am game.

The truth of the matter is, "domestics" (and they are not domestic at all, by the way) are so far behind the curve, that it is a shame.

And barely managing to get 20 MPG in a heavy, gasoline-powered boat, what is so difficult to understand? I could maybe hypermile it up to 31 MPG on the highway, but I drive a combined route, and with my clean diesel, which by the way is also a boat, I get 42-48 MPG on that same route. So when I get 19.2 MPG, you better believe I go through a fuel consumption shock!
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