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Toyota (TM) Settles Unintended Acceleration Class Action Suit, Will Take $1.1B Charge

December 26, 2012 4:30 PM EST Send to a Friend
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Toyota (NYSE: TM) is looking at some stiff fines as it hopes to settle unintended acceleration claims.

The WSJ is reporting this afternoon that Toyota might pay up to $1.1 billion in an effort to install new safety equipment and reimburse orders of about 16 million affected vehicles.

Toyota will take a $1.1 billion pre-tax settlement in the third quarter, according to a filing made with a federal court in California. The settlement will involve no admission of fault by Toyota.

Up until now, the costs associated with recalls and probes from the 2009 - 10 event totaled about $3.1 billion. Additionally, some estimates have Toyota losing about $2 billion in sales from bad PR tied to the recalls.

The breakdown of payments is such
  • $250 million to owners who sold/turned-in vehicles by September 1, 2009, and December 31, 2010, for lost value;

  • $250 million to those whose vehicles cannot be updated for brake-override systems;

  • Between $200 million and $400 million to install brake override systems;

  • $400 million for extending warranties; and

  • $200 million in attorneys' fees.

Toyota ended the session down 0.9 percent today.

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