Toyota faces class-action problem

Toyota is facing dozens of class-action lawsuits in the US that could cost it billions of dollars in damages as the Japanese company struggles to contain the fall-out from its mass recall of faulty cars.
Akio Toyoda, Toyota’s chief executive, is on Wednesday due to update the public in Tokyo about what steps the company is taking to address the design flaws that led to unintended acceleration and braking problems in some of its most popular models.

Mr Toyoda’s presentation is part of a belated drive to counter the negative fall-out, including the proliferation of lawsuits and two US Congressional committee hearings that will probe its response to drivers’ complaints. One committee has asked Mr Toyoda to testify during a planned visit to the US next month.
Tim Howard, a law professor at Northeastern University in Boston who is co-ordinating litigation against Toyota, estimated that 44 class-action lawsuits had been filed under state and federal law by the end of last week. He estimated that the claims could reach $3.6bn, based on an average loss of $600 per vehicle.
A court hearing is scheduled in San Diego on March 25 to determine the location of a single national case.
Some claims relate to deaths, injuries and property damage allegedly caused by defective parts, while others are based on a drop in Toyota vehicles’ trade-in values.
“The only way business understands is when you hurt their profits”, Mr Howard said. “If they’re going to spend a little bit to clean this up, that’s not going to hurt their business model.”
In addition, some dealers and car auction companies have claimed compensation as a result of the freeze imposed earlier this month on sales of eight recalled Toyota models, pending repairs to their accelerators.
Two law firms spearheading a claim by dealers and auctioneers in Kansas and Louisiana, said that “class actions allow small businesses to come together and take on a corporate Goliath like Toyota”.
The National Highway Traffic Safety Administration, which regulates vehicle safety, said that it had received complaints linking unintended acceleration in Toyota vehicles to 34 deaths and 22 injuries.
NHTSA, which itself faces criticism over its response Toyota safety issues, has also received 1,120 complaints about braking problems in the Prius hybrid hatchback. The complaints cite 34 crashes and six injuries but no deaths.
TrueCar, an online car research service, said the number of searches on its websites for eight recalled Toyota models had almost halved in the past three weeks, while interest in other Toyota models was down by 16 per cent.
Toyota will slow production at two US plants in coming weeks to reduce stocks of some models, including the Camry, the US’s top-selling car.
Additional reporting by Stephanie Kirchgaessner and Jonathan Soble

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