US imposes US$1.2b penalty on Toyota, files criminal charge
Print Edition
THE US government announced a US$1.2 billion settlement with Toyota Motor Corp yesterday and filed a criminal charge alleging the company defrauded consumers by issuing misleading statements about safety issues in Toyota and Lexus vehicles.
Attorney General Eric Holder said it is the largest financial penalty of its kind ever imposed on an auto company. Under a deferred prosecution agreement, an independent monitor will review policies, practices and procedures at the company.
The action concludes a four-year criminal investigation into the Japanese automaker’s disclosure of safety problems, which focused on whether Toyota was forthright in reporting problems related to unintended acceleration troubles.
“Rather than promptly disclosing and correcting safety issues ... Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress,” Holder told a news conference.
Toyota said that at the time of the recalls, “we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust,” said Christopher P. Reynolds, chief legal officer of Toyota Motor North America. “In the more than four years since these recalls, we have gone back to basics at Toyota to put our customers first.”
Toyota said it had “made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements.”
Starting in 2009, Toyota issued massive recalls, mostly in the US, totaling more than 10 million vehicles for various problems including faulty brakes, gas pedals and floor mats. From 2010 through 2012, Toyota paid fines of over US$66 million for delays in reporting unintended acceleration problems.
The National Highway Traffic Safety Administration never found defects in electronics or software in Toyota cars, which had been targeted as a possible cause.
The settlement continues a string of bad publicity for Toyota, which before the unintended acceleration cases had a bulletproof image of reliability. Since the cases surfaced, the company’s brand image has been damaged and it has lost US market share as competition has intensified.
Last year, Toyota agreed to pay more than US$1 billion to resolve hundreds of lawsuits claiming that owners of its cars suffered economic losses because of the recalls. But that settlement did not include wrongful death and injury lawsuits that have been consolidated in California state and federal courts.
In December, Toyota filed court papers after a four-year legal battle saying that it’s in settlement talks on nearly 400 US lawsuits, but other cases aren’t included in the negotiations.
The talks come less than two months after an Oklahoma jury awarded US$3 million in damages to the injured driver of a 2005 Camry and to the family of a passenger who was killed.
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