Toyota Australia faces payout over diesel defect on HiLux, Fortuner and Prado models

Thousands of owners are entitled to payouts after a judge ruled that popular models were defective and should have been fixed earlier.

Toyota Australia could face a compensation bill of more than $2 billion after losing a class action over a faulty diesel particulate filter fitted to more than 260,000 vehicles.

Justice Michael Lee in the Federal Court ordered Toyota to pay Prado owner Kenneth Williams $13,191.65 in damages, ruling that the company had sold him a defective vehicle.

The damages were awarded for a reduction in the value of the car and lost earnings incurred when the work vehicle was off the road.

Justice Lee said Mr Williams was entitled to believe that the car he bought was fault-free and of a high quality, but that was not the case.

“Although apparently safe to drive, it was not designed to function properly during all driving conditions and, even if driven normally, there was a substantial likelihood that white smoke would come out of the car’s exhaust, along with a malodour.

“This problem also meant it was likely the car would use more petrol than expected and he would receive excessive notifications requiring him to service the car,” Justice Lee said.

Customers complained about white smoke coming from their Toyota HiLuxes. Picture: Thomas Wielecki

“If he had of known the true position, there is no question in my mind that he would likely have paid less for the car. After all, it was not the problem-free car he thought he had purchased,” he said.

He said Toyota had known about the defect since 2016.

Justice Lee said Toyota had attempted to trivialise the effects of the “foul-smelling smoke” that came out of the car’s exhaust when the filter failed.

Customers had complained of being abused by other motorists and pulled over by the police when their vehicles had belched white smoke. They also felt embarrassed and weren’t able to wind the windows down.

They were also frustrated by having to take their car back to the dealership on several occasions and disappointed by the vehicle’s fuel use.

He said customers complained of feeling “angry, deceived, misled, frustrated, disappointed, stressed and inconvenienced” by the defect.

“A vehicle that requires frequent, unscheduled repair or replacement of a component part would not be regarded as acceptably ‘durable’ by a reasonable consumer,” he said.

The judge ruled that the defect in the vehicle reduced its value by 17.5 per cent. Owners of the 264,000 affected vehicles will now be entitled to seek to recover similar amounts through a compensation procedure yet to be determined.

Toyota’s popular Prado off-roader was also affected by the filter problem. Picture: Supplied.

The ruling applies to diesel-powered Toyota HiLux, Fortuner and Prado models sold between 2015 and 2020.

Lawyers for the complainants — Mr Williams and his company Direct Claim Services in Queensland — argued that the faulty diesel particulate filter reduced performance, increased fuel consumption and could have potentially damaged engines.

The filter, fitted to Toyota’s 2.8-litre turbo diesel engine, is designed to trap exhaust soot. Any blockages are then periodically cleared by heating the exhaust and burning off the soot when the car is travelling at highway speeds.

Toyota initially asked customers to return their vehicles for a reprogramming of the engine control module. Dealers conducted a smoke test and replaced the filter if needed.

The company then retrofitted a manual burn-off switch to all affected models in 2018, allowing customers to burn off excess particulates when required.

Customers complained of high fuel consumption on the Toyota Fortuner 4WD. Picture: Supplied.

But the class action alleged that by that time, owners had been forced to deal with higher fuel use, reduced performance and potential engine damage.

Drivers also had to put up with “the emission of foul-smelling white fumes from the tailpipe”, while the resale value of their vehicles was also affected.

The firm also argued customers had been forced to take time off work to return their vehicles to Toyota dealerships for software fixes and filter replacements before the switch was fitted.

It claimed that Toyota had known about the problem since 2016 and had not acted quickly enough to fix it, engaging in “misleading” and “unconscionable” conduct.

Ken Williams, the successful applicant, was happy with the result.

“I am thrilled with today’s judgment, particularly that the court has found that hundreds of thousands of ordinary Australian consumers who bought these vehicles are entitled to be awarded damages for the losses they suffered as a result. I hope today’s judgment provides a degree of comfort to people who, like me, have had to deal with the disappointment, inconvenience and extra cost of owning these vehicles.”

The decision is a blow to the Toyota brand, which has built its reputation on quality, durability and reliability.

The HiLux has been the top-selling vehicle in the country for the past six years, while the Prado is regularly among the top ten selling cars.

A spokesperson for Toyota said: “We are in the process of reviewing the court’s judgment. At every step, we believe that we have implemented customer focused and technically grounded remedies to resolve customers’ concerns. Toyota will carefully consider the initial trial judgment before making any further comment.”

Originally published as Toyota Australia faces payout over diesel defect on HiLux, Fortuner and Prado models