Lawsuits against Toyota Motor Corp., the world's largest automaker, will push the cost of recalls linked to sudden acceleration past a $2 billion company estimate for warranty payments and lost sales, customer lawyers say.
People who purchased Toyota vehicles in the U.S. have filed at least 34 class action lawsuits against Toyota, seeking damages that range from loss of car value to a return of profits. Toyota faces at least 12 individual lawsuits claiming deaths or injuries caused by unwanted acceleration of vehicles. Customer lawyers said they're considering filing dozens more.
In similar class actions against carmakers, some customers settled claims by taking discount coupons for future purchases, most of which were never used. Toyota customers will demand cash, said attorney Michael Louis Kelly, who has filed two such suits in California. The Kelley Blue Book, the used-auto pricing service used as a guide in private-party transactions, reported last week that values of Toyota vehicles had already suffered a loss of up to 3 percent of resale value.
"The damages could be in the billions of dollars in the loss of value alone," Kelly said in an interview. "I don't think we're talking about coupons under any circumstances."
In a Feb. 4 earnings call, Toyota, based in Toyota City, Japan, estimated it will have to spend $1.12 billion on warranty expenses and will lose as much as $895 million in lost sales over the recall. It also reported about $23 billion in cash and near cash.
No Cost Estimate
Mike Michels, a Toyota vice president of corporate communications, declined to comment on the potential loss, saying the company didn't have an estimate on potential litigation costs. He said the company had liability insurance, without elaborating on its extent, and that it did not cover warranty costs, which were budgeted before the recalls.
In the earnings call, Toyota didn't provide details on any reserves to cover the costs of its recalls, which affect 5.6 million vehicles in the U.S. and Canada, not including Prius and other hybrid vehicles that may be recalled to fix a company- recognized defect in their automatic-braking system.
Full story
