Automotive - - Nov 15,2016
Toyota Motor Corp. has agreed to pay $3.4 billion in settlement of a class action lawsuit filed against them in the United States.
The lawsuit was filed by owners of Toyota pick-up trucks and SUVs who complained that the frames of their vehicles had no proper protection from rust. This agreement covers over 1.5 million Toyota vehicles manufactured between 2005 and 2010, namely, Tacoma compact pick-ups, Tundra full size pick-ups and Sequoia SUVs.
These vehicles were alleged to be deficient in rust prevention, causing corrosion prematurely that could harm their structural integrity. Attorneys of the vehicle owners estimated the value of frame replacements at $3.375 billion based on the cost of every vehicle at $15,000 and another $90 million based on the inspection cost at about $60 per vehicle.
The Japanese automaker did not admit liability or wrong doing in the proposed settlement that was filed last week in a District Court in Los Angeles. But Toyota has said that it want its customers to have a great ownership experience and wishes them to be the ultimate beneficiaries in the settlement of this litigation. It also assured that, the company stands behind the quality and reliability of its vehicles.
Under the settlement, Toyota will have to inspect the vehicles for 12 years from the date of their sale and replace the frames, if needed, on its cost. It will also repay the owners who have previously paid for the replacement. Toyota also agreed to pay $9.75 million as the attorney’s fees and $150,000 for other costs and expenses.
General Motors had to recall millions of its cars and spend billions in 2014, when its ignition switch problems were linked to over a 100 deaths in road accidents. Volkswagen also faced major criticism and a loss of $14.7 billion in its diesel emission scandal last year. This agreement is deemed to be a major financial setback for Toyota at a time when the company’s huge profit streaks are slowing down.