Toyota shares up after US settlement was smaller than expected

Article by Christian Andrei, on December 30, 2012

After it was announced that Toyota Motor Corp.’s settlement proposal of $1.1 billion was smaller than expected, its shares gained 1.6% last Thursday as investors breathed a sigh of relief. The settlement was for the resolution of U.S. class-action litigation claims over unintentional acceleration in its vehicles. Toyota said that to cover the estimated costs of the settlement, it will take a one-time pretax charge of $1.1 billion, according to court filings.

Due to the complaints over unintended acceleration, Toyota issued numerous recalls between 2009 and 2011, forcing the company to pull back more than 10 million vehicles globally and hurting its image for quality. Under the settlement, there is a $250 million fund for former Toyota owners who sold vehicles at lower prices due to the negative publicity.

There will also be a different $250 million fund for owners who don’t qualify for the brake override system. According to a senior trader at a foreign brokerage, the $1.1 billion charge and the $250 million compensation eliminated the uncertainty over Toyota's share price.

Toyota shares gained 1.6% to 3,890 yen in midmorning trade. This year, the stock has increased 51.7%, moving at a faster rate than a 36.5% gain in the Topix's transport equipment subindex, home to Toyota and other automakers.

Another factor that helped Toyota shares was the previous day’s announcement that it hopes to attain record-high groupwide global sales and production in calendar year 2012. Daihatsu Motor Co and Hino Motors Ltd. are included in the groupwide figures.

Topics: toyota, shares

If you liked the article, share on:


Login or Create new account to add a comment!


Many are already expecting BMW to launch an ultra luxurious SUV that will serve at its new flagship by late 2018. Larger than the X5 and X6, the new X7...
by - October 21, 2016
Most of you may have heard or already have one of those autonomous home appliances doing the house chores. Thus, it’s not anymore unusual to see a car going places...
by - October 20, 2016
Mini has just provided the world with a preview of its first hybrid model that employs petrol-electric power to propel its wheels. Derived from the second generation of the Mini...
by - October 20, 2016
For the second time in three years, German driver Marco Wittmann of BMW Team RMG reached the summit in the DTM Drivers’ Championship. Even though Wittmann only secured a fourth...
by - October 20, 2016
The recent motor show has given us a lot of promising vehicles to look forward to for the time being. After we caught a glimpse of the future of motoring,...
by - October 19, 2016