The automaker said it plans to take a $1.1-billion accounting charge to cover the settlement.
Meanwhile, a law firm representing plaintiffs that sued Toyota estimates that the settlement could cost Toyota between $1.2 billion and $1.4 billion.
Either way, it is among the largest settlements of its kind.
“I can’t tell you for certain that it’s the largest ever," said Carl Tobias, professor of law at the University of Richmond who teaches product liability law. “It’s certainly a strong settlement, especially because some observers didn’t think these cases had much of a chance after" the National Highway Traffic Safety Administration "and NASA closed their investigations."
In 2010, Toyota was stung when it was forced to recall millions of its most popular models after reports surfaced of cars that accelerated uncontrollably.
Today, Toyota said it plans to offer cash payments to eligible customers who sold or turned in their cars and trucks between 2009 and 2010 and to eligible current owners and lessees who will not be offered an upgraded brake-override system.
Toyota said it plans to retrofit additional models with a free brake-override system to provide an added measure of confidence that its vehicles can be stopped if they accelerate unexpectedly.
Toyota also agreed to pay another $250 million to reimburse owners whose vehicles cannot be retrofitted with the brake-override system. Detroit Free Press