Toyota has agreed to pay an estimated $1.1 billion (£700 million) to settle US lawsuits relating to the biggest safety crisis in its history.
Shares in the Japanese car giant rose yesterday as investors said the legal settlement removed one uncertainty for the company and looked manageable given its improving sales outlook.
Since 2009, the group has had to recall more than 14 million vehicles worldwide after floor mats became trapped under the accelerator.
The settlement, which still needs to be approved by a US judge, would see American owners compensated for economic losses and for the cost of safety changes to their vehicles.
Christopher Reynolds, general counsel for Toyota Motor sales in the US, said: “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.”
The figure eclipses other settlements in the motor industry including Bridgestone’s $240m pay-out to Ford in 2005 over the US car giant’s massive Firestone tyre safety recall four years earlier. Ford replaced 13 million Firestone tyres, installed mainly as original equipment on the company’s popular Explorer model.
Hagens Berman, the law firm representing Toyota owners who brought the initial lawsuit in 2010, issued a statement saying that the settlement was valued between $1.2bn and $1.4bn. In a memo filed in court, the lawyers said the settlement was “a landmark, if not a record, settlement in automobile defect class action litigation in the United States”.
Toyota said it would take a one-off, pre-tax charge of $1.1bn to cover the costs. Analysts said the group may be able to offset those costs with a rise in its profits as the yen weakens against other currencies.
US district Judge James Selna was expected to consider the settlement deal today.