Toyota agrees to pay $1.1 billion in US recall deal
By Sayed Jawad - Thu Dec 27 2012, 2:25 pm
The settlement, filed in a federal court in California on Wednesday, will result in a $1.1 billion pretax charge to earnings this quarter, Toyota said. Owners of some 16 million Toyota, Lexus and Scion vehicles would be eligible for payments and safety updates that would vary depending on their vehicle and its age.
Lawyer Steve Berman, a plaintiffs’ attorney, said the settlement is the largest settlement in U.S. history involving automobile defects.
“We kept fighting and fighting and we secured what we think was a good settlement given the risks of this litigation,” Berman told The Associated Press.
Berman said the total value of the deal is between $1.2 billion and $1.4 billion. Toyota said it will take a one-time, $1.1 billion pre-tax charge against earnings to cover the estimated costs of the settlement.
Toyota will create a fund for retrofitting 3.2 million Toyota and Lexus cars with technology that makes them easier to stop in a panic situation, as part of the settlement in a U.S. District Court case that sought class-action status. Owners of models that can’t be retrofitted will receive cash payouts. And those who sold their vehicles in late 2009 and all of 2010 will be eligible for compensation due to lowered resale value due to the issue.
The 2009/2010 recalls and public scrutiny of accidents involving its vehicles—including congressional hearings—dented Toyota’s reputation for quality and undermined its sales. Its U.S. sales were flat in 2010, a year in which almost every other major auto maker posted gains, and ended its 30-year unbroken run of market-share increases in the U.S.