The Japanese vehicle juggernaut, Australia's best-selling car brand for more than two decades, will "vigorously defend" the claims filed in the Federal Court on Wednesday.
The suit was filed on behalf of disgruntled drivers of Corollas manufactured from July 12, 2010 to September 30, 2014 and painted with factory code 040 white paint.
The claim argues the paint defect breaches Australian Consumer Law and that Toyota is liable to compensate affected customers for loss and damage.
Under Australian Consumer Law, any vehicle purchased from 2011 onwards must be of "acceptable quality".
But in a July 2022 statement, Toyota Australia explained the alleged defects could have arisen because of sustained sunlight and ultraviolet (UV) exposure.
"Over time, (exposure) degrades the adhesion between the factory-applied paint primer coat layer and the base metal electrodeposition layer, causing paint to peel from the metal body panel."
Lawyers from William Roberts argued that Toyota hid some crucial information from consumers about alleged manufacturing problems.
"Throughout the periods during which the affected vehicles were manufactured, Toyota did not disclose to the public that affected vehicles contained the paint peeling defect or ... had the propensity to experience the ... defect," they said.
The Australian Competition and Consumer Commission says consumers have a right to a free repair when a car has a minor problem.
A Facebook group boasting over 7000 members, dedicated to taking Toyota to task over what they say are flaws from the car maker, had several Corolla drivers voicing their intention to join the lawsuit.
Many posted photos of paint peeled off from large sections of their vehicles.
A Toyota spokesperson acknowledged the claims, adding customers with questions about their vehicles should contact their local dealer.
"Toyota Australia has been served with a statement of claim for a paint peeling class action in relation to certain 2010 – 2014 Corolla vehicles," they said.
"We intend to defend the claims vigorously."