Preliminary Approval Granted for Toyota's $1.1 Billion Unintended Acceleration Settlement

Overview of the Settlement

Toyota Motor Corporation's $1.1 billion settlement has been preliminarily approved by U.S. District Judge James Selna in Santa Ana, California. This class-action lawsuit was initiated by customers who claimed their vehicles lost value due to unintended acceleration issues. Judge Selna has scheduled a final approval hearing for June, stating that the settlement "will likely serve the interests of the class members better than litigation."

Breakdown of the Settlement

The settlement includes:

• $500 million in cash for the plaintiffs.
• Installation of brake override systems and a customer support program valued at a combined total of $600 million.

This settlement covers more than 16 million Toyota, Lexus, and Scion vehicles from the 1998 to 2010 model years.

Statements from Key Figures

Steve Berman, the plaintiff's lawyer, expressed satisfaction with the settlement and the judge's favorable comments. Julie Hamp, a spokeswoman for Toyota, stated that the company was pleased with the approval, noting that it "will provide value to our customers and an extra measure of confidence in their vehicles."

Exclusions and Ongoing Legal Actions

The settlement does not cover wrongful death and injury lawsuits, which number around 300 according to a June filing by Toyota. These plaintiffs will need to pursue separate legal actions to seek compensation for damages sustained in accidents caused by unintended acceleration.

Toyota's Stance and Findings

Toyota has not admitted fault in proposing the settlement, which is one of the largest in U.S. history involving automotive defects. The company maintains that unintended acceleration issues were not related to their electronic throttle control system. Instead, they attribute the problems to poorly fitting floor mats and sticky gas pedals, which have since been addressed.

A study by the National Highway Traffic Safety Administration (NHTSA) supports Toyota's claims, finding no link between the throttle control system and unintended acceleration incidents (NHTSA Report).

Impact on Toyota's Reputation and Sales

Despite the negative press and multiple recalls from 2009 to 2011, Toyota has seen significant sales gains. As of November 2012, Toyota's sales increased by nearly 29%, compared to the industry-wide gain of 14%. Their U.S. market share also grew to 14.4%, up from 12.7% in 2011 (Automotive News).

Sales Statistics

Conclusion

Judge Selna's decision to preliminarily approve the settlement is seen as a fair resolution, avoiding prolonged and complex litigation. He noted that "some of these rulings have been favorable to plaintiffs; some have been favorable to Toyota. Were the parties to proceed to a fully litigated result, virtually any outcome would face the risk of uncertainty upon appellate review of these rulings."

Despite the challenges, Toyota's continued sales growth suggests that consumer confidence in their vehicles remains strong. This settlement, if finally approved, could mark the end of a tumultuous chapter for the automaker, allowing them to focus on future innovations and maintaining their market position.

Little-Known Facts

• Toyota's Market Resilience: Despite the recalls, Toyota's market share increased by 1.7% from 2011 to 2012.
• NHTSA Findings: The NHTSA study found no electronic defects in Toyota's throttle control system, a crucial point in the automaker's defense (NHTSA Report).

By addressing these issues head-on and compensating affected customers, Toyota aims to restore its reputation and continue its legacy of reliability and innovation in the automotive industry.