Leading car manufacturer Toyota Motor Corp has reached an agreement worth more than USD 1 billion to settle a lawsuit involving unintended acceleration in some of its vehicles as the company recalled 7.43 million vehicles worldwide to fix the problem.
In a statement on Wednesday, Toyota had said it would take a one-time, USD 1.1 billion pre-tax charge against earnings to "cover the estimated costs of the economic loss settlement and possible resolution costs of civil litigation brought in California by the District Attorney of Orange County and an investigation by a multi-state group of Attorneys General stemming from previous recalls."
It comes after Toyota has paid nearly USD 70 million in US fines after the National Highway Traffic Safety Administration had failed to recall millions of vehicles in a timely fashion.
Under the proposed settlement, Toyota will offer special vehicle coverage for up to 150,000 miles on 16.3 million vehicles and will retrofit as many as 2.7 million vehicles with brake override systems, the statement said.
The special coverage will be for Engine Control Module, Cruise Control Switch, Accelerator Pedal Assembly, Stop Lamp Switch, and Throttle Body Assembly, it said. Toyota will also spend USD 30 million to fund automobile safety research and education related to issues in the suits. The fund will be divided between contributions to university- based automobile/transportation research institutes and an education/information program for automobile drivers, it said.
"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," said Christopher P Reynolds, group vice president and general counsel, Toyota Motor Sales, USA, and chief legal officer, Toyota Motor North America.
"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."
The settlement must still be approved by a federal court judge. The recall involves 7.43