On Wednesday 26 December the Financial Times reported that Toyota Motor (NYSE:TM) has agreed to spend $1.1 billion (£682 million) to settle a number of US class-action litigations related to claims that millions of its vehicles accelerated unintentionally.
After three years of embarrassing safety issue allegations the Japanese carmaker was finally able to put the entire fiasco to an end after reaching a settlement in a US court. According to the FT, the $1.1 billion (£682 million) charge would cover payments to owners whose cars fell in value as well as covering the estimated costs of fitting new safety equipment to affected vehicles.
The litigation began following a series of incidents in 2009 where Toyota cars, including the popular Prius hybrid, appeared to have accelerated on their own. Toyota has remained convinced there was nothing wrong with the electronic throttle control systems that has been implicated in many of the systems. It reiterated that stance in the press release announcing yesterday’s settlement.
Hagens Berman, the law firm that represented Toyota owners in a class-action lawsuit, said the settlement included $250 million (£155 million) in payments to compensate Toyota owners who sold their cars between September 2009 and December 2010. Another $250 million (155 million) is meant to go towards compensating current owners ineligible for the brake-override system that the carmaker designed to prevent future incidents.
Toyota promised to extend warranties over parts related to the alleged malfunction for 16 million consumers who currently own potentially affected Toyota vehicles. The Japanese carmaker also said it is expanding the number of models eligible for the brake override system. Christopher Reynolds, Toyota’s general counsel for North America, said the agreement was “a significant step forward” enabling the company to put more of its time and energy into developing the best vehicles possible. A person familiar with the matter quoted by The Wall Street Journal said that Toyota officials agreed the company had proven that its vehicles are safe and it had recovered enough from the scandal to settle the case without harming its public image. “Toyota wants to put its unintended acceleration recalls behind it once and for all,” said Jesse Toprak, an analyst with the auto research site TrueCar.com, as quoted by The New York Times. “As costly as it may be, this settlement will allow them to remove most of the lingering financial uncertainty.”
!m(/uploads/story/1092/thumbs/pic_1_inline.png)Toyota is looking to dethrone General Motors from the number one spot as the biggest car manufacturer in the world. The company’s sales were up 29 percent in November compared to a year earlier and it has gained 2 percentage points of market share. Toyota’s share price has risen by 36.64 percent on a year-to-date basis. Yesterday it fell 0.90 percent to $90.36 a share.
**Redesigning the RAV4 Model**
In November Toyota announced it has redesigned its hot sale model, the RAV4 vehicle, after a decline in sales partly due to the launch of rival Honda Motor’s CR-V model.
According to Forbes magazine, the new RAV4 looks sportier with the front end completely overhauled from previous versions. The V6 engine has been discontinued as the 2013 model comes with a four-cylinder engine packing with 176 horsepower.