Toyota to Pay $750 Million in Australian Diesel Defect Settlement

Toyota has agreed to a $750 million settlement to resolve two class-action lawsuits concerning defects in the diesel exhaust systems of certain vehicles sold in Australia. If approved by the Federal Court, the payout would provide cash payments to at least 136,000 Toyota owners.

The class actions cover Australian owners who purchased specific Toyota HiLux, Prado, and Fortuner diesel models between October 1, 2015, and April 23, 2020, including vehicles later sold by their original owners. The settlement, if finalized, would surpass the Robodebt settlement in cost to affected parties, which involved approximately $650 million for taxpayers across two class actions.

Under the proposed settlement, litigation funder Balance Legal Capital is seeking a commission of $244 million, and an additional $18 million is allocated for legal fees. This would leave an estimated $488 million for the 136,000 eligible owners, averaging about $3,588 per person if distributed equally.

Toyota confirmed the agreement to settle, stating it is subject to court approval. "We remain committed to assisting any impacted customers and to providing a free-of-charge remedy that has been available since 2020," a company spokesperson said, apologizing "for any inconvenience or discomfort experienced by our customers." The company emphasized the importance of customer trust, which has been central to Toyota Australia for over 70 years.

The affected diesel vehicles were equipped with faulty exhaust filters prior to Toyota implementing a fix in 2018. These defects could lead to blocked filters, resulting in foul-smelling white smoke and reduced fuel efficiency, imposing additional costs on owners for fuel and repairs.

Owners initially won their first court challenge in 2022, but Toyota's subsequent appeal prolonged the legal proceedings. In late 2024, the High Court ruled against Toyota, remanding the case to the Federal Court. Justice Michael Lee was scheduled to oversee a new trial this year, but the parties informed the court of their settlement agreement.

Justice Lee is expected to make a decision on the approval of the settlement at a hearing scheduled for late November.