Latest News > Why Exactly is Toyota Paying a $1.1B Settlement?

Why Exactly is Toyota Paying a $1.1B Settlement?

by Ryan ZumMallen on

The long saga surrounding Toyota and unintended acceleration in their vehicles has come to a merciful end, as the automaker has agreed to pay a settlement worth more than $1.1 billion. But what does that mean, exactly? And did Toyota really do anything wrong in the first place?

Toyota will dole the billion-dollar fine out in several increments, acting as pre-tax charges against future earnings. They include $250 million to Toyota owners who sold or traded in their – presumably devalued, thanks to the controversy – vehicles in 2009-10, between $200-400 million to install brake-override systems on existing cars, $250 million to owners whose cars aren’t eligible for the upgrade, $400 million for extended warranties and about $225 million in lawyer fees.

A billion dollars is a lot of money. But to Toyota, in the grand scheme, it’s the easy way out. Spreading out $250 million to thousands of owners does not amount to very much money per person, this Car And Driver article explains that the cost of brake-override systems basically pays themselves, and the paying the lawyers now means they don’t have to slog through an even more expensive and potentially image-damaging trial. Taking the billion-dollar settlement, oddly, just makes financial sense.

But does it make actual sense? Probably not. The issue should have been settled the day the NHTSA issued their report that no mechanical error had been discovered in any case of unintended acceleration. That meant that while accidents occurred – and we shouldn’t forget those tragically injured or killed – it probably wasn’t a Toyota issue, but most likely driver error. Public perception is still that Camrys and Highlanders were barreling out of control of their own accord, but the reality is that people were more likely confusing the brake pedal with gas.

Some have posited the reason is that Toyota has appliancized the industry, with dull or even boring cars that discourage driver involvement. Jalopnik has been the leader of this movement with their Beige Bites Back series. Toyota is certainly aware of their unwanted reputation, and is clearly trying to muscle-up their fleet with more involved cars like the new Lexus LS F Sport, sporty Avalon and exploding preview of the new Furia Concept (which may prove to just be the new Corolla).

So to them, it’s probably more than worth it to just pay the cool billy and be done with it. After all, they’ve just regained the title of Largest Automaker In The World and have new leaves to turn.

*

Visit the autoMedia.com Toyota Research Center for quick access to reviews, pricing, photos, mpg and more. Make sure to follow autoMedia.com on Twitter and Facebook.