Toyota Agrees to Issue Coupons to Settle Lawsuit : Autos: The accord would satisfy claims that customers were overcharged for vehicles between 1990 and 1994.

The U.S. sales arm of Toyota Motor Corp. said Friday that customers who bought new vehicles from 1990 to 1994 would receive $1.28 billion worth of discount coupons under a tentative agreement to settle a class-action lawsuit that charged the company and its dealers with improperly inflating prices.

An estimated 8.5 million customers who bought or leased the Toyota vehicles during the five-year period would receive coupons for $150 off the price of a new or used Toyota, according to J. Thomas Rosch, an attorney in San Francisco for Toyota Motor Sales U.S.A.

A court-appointed expert estimated that between $363 million to $518 million of the coupons would eventually be redeemed based on number of estimated resales to current Toyota owners.

The customers would also be able to apply $50 of the coupon to pay for part of service or repair bills exceeding $120, he said. The coupons would be good for up to five years and freely transferable.

The agreement must still be approved by the dealers, dealers’ advertising associations, plaintiffs and San Francisco Federal District Judge Marilyn Hall Patel, who is overseeing the case. A hearing will be held at the end of February to review the final agreement, Rosch said.

The lawsuits claimed that Toyota and its dealers inflated prices and misled consumers by tacking a dealer advertising fee on auto invoices that was really only a payment to pad dealer profits.

Two lawsuits, later turned into the class-action suit, were filed last year in the San Francisco area after a former Toyota dealer sales manager disclosed the practice.

Rosch said Torrance-based Toyota Motors U.S.A. has done nothing wrong and considers the lawsuit without merit, but said it had agreed to the settlement because it wants to avoid any further costly litigation.

The head of the Southern California Toyota Dealers Assn. has said there is nothing wrong with the advertising fee charges, noting they have existed for years and are typical of the cooperative advertising programs used in the auto industry and other retailing businesses.

Toyota Motor Sales also agreed it would pay a maximum of $4.5 million in fees to the attorneys who negotiated the agreement on behalf of the Toyota customers. “Both Toyota and the dealers want to get back to the business of selling Toyotas,” Rosch said.

Attorneys for the plaintiffs could not be reached for comment.

The auto maker has started sending notices of the proposed settlement to its 12 regional advertising associations and will later mail notices to dealers to see if they want to participate in the settlement.

If a majority of both groups agree, customers will be notified of the proposed settlement beginning in January. Patel is scheduled to consider final approval of the plan in February. The tentative agreement was reached last month but was not revealed until late this week.

*

Bloomberg Business News contributed to this report.