Toyota Agrees to $1.2B Settlement

Toyota this week agreed to a $1.2 billion settlement that U.S. Attorney General Eric Holder said is the largest financial penalty of its kind ever imposed on an auto company. The settlement puts an end to a four-year criminal investigation into massive recalls of more than 10 million vehicles.“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress,” Holder said in a press conference announcing the settlement. “And they concealed from federal regulators the extent of problems that some consumers encountered with sticking gas pedals and unsecured or incompatible floor mats that could cause these unintended acceleration episodes.” The Justice Department also filed criminal charges, alleging wire fraud, but deferred prosecution. “But let me be clear,” Holder said, “the Department has not, and will not, consent to foreclose criminal prosecution if the terms of this agreement are not rigorously honored.”

From 2010 to 2012, Toyota has paid more than $66 million for delays in reporting problems with the cars, including unintended acceleration and floor mat entrapment. “We have made fundamental changes across our global operations to become a more responsive company – listening better to our customers’ needs and proactively taking action to serve them,” Christopher P. Reynolds, chief legal officer, Toyota Motor North America, said in a statement.

Some are suggesting that the settlement may serve as a model for how U.S. regulators will explore a similar investigation set to be launched at GM. The Detroit automaker has recalled more than 3.1 million vehicles in the U.S. and other markets in the last two months for faulty ignition switches – which led to 12 fatal accidents – and airbag issues, brake parts and other components.