Toyota to take $1.1B writedown

Toyota Motor Corp. said Wednesday it will take a $1.1 billion writedown to settle claims that its vehicles lost value because of the carmaker’s recalls for unintended acceleration-related issues.

Under the settlement agreement, filed in federal court in Santa Ana, Calif., Toyota will begin a customer-support program providing coverage for certain vehicle components and will retrofit additional non-hybrid vehicle models subject to a floor-mat recall with a free brake-override system, according to an emailed statement from the company.

Asia’s largest carmaker will also offer cash payments to eligible customers who sold or turned in their leased vehicles in 2009 or 2010, according to the statement. Toyota, based in Toyota City, Japan, will take a one-time, $1.1 billion pre-tax charge against earnings to cover the estimated costs of the settlement, according to the statement. Plaintiffs’ lawyers said the accord is valued at $1.2 billion to $1.4 billion, according to a separate statement.

“This agreement marks a significant step forward for our company, one that will enable us to put more of our energy, time and resources into Toyota’s central focus: making the best vehicles we can for our customers and doing everything we can to meet their needs,” Christopher P. Reynolds, vice-president and general counsel for Toyota’s U.S. sales arm, said in an emailed statement.

The accord announced Wednesday settles the economic-loss portion of the Toyota sudden-acceleration lawsuits. Lawsuits claiming personal injuries and deaths caused by such incidents remain pending, with the first federal trial set for February in Santa Ana.

The case was filed in 2010 after drivers across the country began reporting that Toyota vehicles suddenly and unintentionally accelerated, according to the statement from plaintiffs’ lawyers. They said the brake override system will be installed in an estimated 3.25 million vehicles.