The Federal Court has reduced the amount of compensation Toyota Australia must pay to more than 250,000 owners of HiLux, Prado and Fortuner vehicles with faulty diesel particulate filters – but the estimated bill could be up to $1.3 billion.

Toyota Australia has lost an appeal against a Federal Court decision over compensation payments coming to more than 250,000 owners of HiLux, Prado and Fortuner vehicles with dodgy diesel filters.

However, the amount owed to owners of affected vehicles has been reduced by at least an estimated $1 billion.

While the final figure is yet to be determined, Toyota Australia could still be required to pay out as much as $1.3 billion to owners of more than 250,000 diesel-powered four-wheel-drives manufactured between 2015 and 2020, after the Federal Court handed down its finding yesterday following an appeal lodged by Japanese car giant mid last year.

The total compensation figure to be paid by Toyota Australia to customers will take into account how many vehicles were fixed and how many were not – and to what extent customers were out of pocket.

In the worst-case scenario, the figure could reach a total of $1.3 billion, though not all owners of affected vehicles may be entitled to the same amount of compensation – if their vehicles were fixed as part of running changes.

It is unclear how the Federal Court will determine how much money each customer will receive as compensation, and who will go through every case one-by-one.

In April 2022, the Federal Court of Australia found Toyota anti-pollution devices on some of the company’s most popular diesel four-wheel-drives had a “core defect” – and the impact on consumers, such as time off the road for repairs and a loss of value of the vehicle, had adversely impacted buyers.

The defect related to 264,170 examples of the Toyota HiLux, Toyota Prado, and Toyota Fortuner models manufactured between October 2015 and April 2020.

These 264,170 Toyota vehicles were fitted with either the 2.8-litre (1GD-FTV) or 2.4-litre (2GD-FTV) turbo-diesel four-cylinder engines, which were found to produce excessive white smoke due to a clogged exhaust system, caused by a defective diesel particulate filter (DPF).

While Toyota Australia’s appeal has not resulted in the original ruling being overturned, the Federal Court has reduced the compensation figure to 10 per cent of the average retail price of affected vehicles – representing an estimated overall payout of close to $1.3 billion, or about $1 billion less than the original amount, before taking into account any vehicles that have been fixed.

As previously reported by Drive, neither Toyota nor the court have estimated the total amount of compensation – instead the $1.3 billion settlement is calculated on a conservative estimate on the average price of each vehicle at about $50,000.

Based on this figure, Toyota Australia could be compelled to pay, on average, about $5000 to each owner of the 264,170 affected vehicles, which would amount to a compensation bill of $1.32 billion. However, the final total compensation figure may be lower once rectified vehicles are taken in account.

An example of a diesel particulate filter

The Federal Court found Toyota’s “field fix” – industry jargon for running repairs and software updates during routine maintenance – took customer cars off the road for extended periods.

However, in the latest hearing, the court found these ongoing and running changes meant the value of the repaired vehicles had not been diminished by as much as initial estimates.

Previous reports by Drive showed a significant number of customers took their vehicles back to Toyota dealerships for repairs on multiple occasions, including private buyers and business fleets.

A spokesperson for Toyota Australia told Drive the Japanese car maker is “reviewing the decision of the Full Court of the Federal Court of Australia”.

“We remain committed to assisting any customer whose vehicle has experienced the (diesel particulate filter) issue and to providing a free-of-charge remedy that has been available since 2020,” a media statement from Toyota Australia said.

“We believe we have implemented customer-focused and technically grounded measures to resolve customer concerns.

“Toyota will consider the judgment carefully before making any further comment.”

Extracted in full from: Toyota loses appeal over dodgy diesels, compensation reduced – but payouts could reach $1.3 billion – Drive