Lawsuits Planned Over Toyota’s Dropped Resale Values
By Brendan Moore
At least 60 consumer class-action lawsuits have been filed in at least thirty-two states so far over the precipitous drop in resale values of Toyotas, according to public statements from some attorneys representing the plaintiffs.
As if Toyota doesn’t have enough legal problems with the forthcoming personal injury suits stemming from the unintended acceleration issues in their cars, now they face suits in United States federal court for economic damages for diminished value or lost use of transportation suffered by owners of Toyota vehicles.
Simply put, the lawsuits over diminished value exist as a result of the fact that anyone with a used late-model Toyota has a vehicle that is now worth quite a bit less than it was worth only two weeks ago.
Toyota vehicles have dropped in resale value since the recalls involving 8.5 million vehicles were announced, with more decreases expected in the future. It has been suggested that the average Toyota may lose an extra 5% – 8% of its original projected residual value this year. As an example of what that could mean to the average consumer, 5% of a $15,000 USD used Toyota is $750.
Toyota’s resale values, which derive from their reputation for safety and reliability, are one of the major reasons many people in the United States buy a Toyota. Toyotas are generally not purchased because their owners consider the cars fun to drive, or, because of their attractiveness. Any large, sustained drop in residual value of used Toyotas would be disastrous for the company from a future sales perspective.
This type of class-action litigation is only expected to grow in the next few months as more consumers become aware of the legal actions against Toyota, and then decide to participate in the class action complaint.
The most recent similar example occurred in 2008, when Ford Motor Company settled with 800,000 customers in a class-action lawsuit over the diminished value of their Ford Explorer SUVs after a recall of the factory-equipped tires used on the SUV. Those customers received discount vouchers ranging from $100 to $500, which could be used against the future purchase of another new Ford. That class-action suit by 800,000 customers started out the same way as this one – with only a few dozen consumers.
“This has the potential to be the biggest product liability case in the automotive industry,” said Richard Cupp, a professor at Pepperdine University School of Law in California.
As a sidebar to this legal activity, a class-action suit was filed in federal court in Los Angeles earlier in the week on behalf of United States shareholders of Toyota stock that accuses Toyota of deliberately misleading investors as to the risks the company faced in the market. The United States operating arm of Toyota is based in California.
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