Toyota has agreed to pay about $1.1 billion (R9.5 billion) to settle a class action lawsuit launched by US vehicle owners affected by a series of mass recalls.
The company did not accept any blame but agreed on Wednesday to compensate owners who argued that the value of about 16.3 million vehicles took a hit from dozens of deadly accidents allegedly caused by Toyota vehicles speeding out of control in 2009.
The deal will also cover the cost of installing a free brake override system in about 2.7 million vehicles, and provide cash payments to those who sold their vehicles in the wake of the recalls or who own vehicles ineligible for the override system.
Once lauded for its safety standards, Toyota was forced into damage control mode in recent years after recalling millions of vehicles over a series of serious defects.
Earlier this year it added two models to the controversial 2009-2010 recalls launched after it was discovered that floor mats were trapping the accelerator pedals.
Toyota's mishandling of the initial problem and other reports of sudden, unintended acceleration led to a US congressional probe, more than $50 million (R430 million) in fines from US regulators and public apologies by its chief.
Just two weeks ago, the company agreed to pay a record $17.35 million (R150 million) fine for failing to promptly notify US authorities that the floor mats could also be trapped under the accelerators of 2010 Lexus models.
And last month Toyota agreed to pay $25.5 million (R220 million) to settle claims from shareholders who lost money after the Japanese automaker's stock price plummeted in the wake of the recalls.
Toyota has worked hard to regain its reputation for safety, while at the same time fighting off the impact of the economic crisis, a strong yen and the devastating 2011 quake-tsunami disaster.
RISKY COURT BATTLE
The settlement helps Toyota avoid a lengthy and risky court battle with angry owners who also argued that Toyota's technology - not the trapped floormats - was behind the deadly instances of sudden, unintended acceleration.
Toyota North America chief legal officer Chritopher Reynolds 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.”
Michelle Krebs, an analyst with automotive site Edmunds.com, said the huge payout would “sting” Toyota, but would also allow the Japanese giant to “leave these troubles behind and move forward in the new year”.
The settlement, which was filed in a California federal court on Wednesday, must still be approved by a judge.
It includes $250 million (2.15 billion) for owners who've sold their vehicles, $250 million for owners whose vehicles are ineligible for the brake override system and $30 million (R257 million) for safety research.
Toyota will also provide free repairs for certain components linked to the recall.
A lead attorney for the plaintiffs said Wednesday's deal could end up costing Toyota as much as $1.4 billion (R12 billion).