Financial News

  • 20 March 2014, 12:38

Toyota To Pay $1.2bn Penalty In Safety Probe

Toyota Motor Corp has been fined $1.2bn (£722m) by the US government for "misleading" consumers over safety concerns linked to the unintended acceleration of its cars.

US Attorney General Eric Holder said it is the largest financial penalty of its kind ever imposed on a car company.

The settlement, coupled with deferred criminal charges, concludes a four-year investigation into the Japanese car maker's disclosure of safety problems.

US Attorney Preet Bharara said: "Because of its campaign of disinformation, Toyota is facing federal wire fraud charges, is admitting that it misled the public about safety problems in its vehicles and is paying a $1.2bn financial penalty."

Under the deferred prosecution agreement, an independent monitor will review policies, practices and procedures at the company.

Mr Bharara said the problem dated as far back as 2007 when Toyota was aware of concerns that vehicle accelerator pedals were getting stuck under floor mats.

The government said the car company repeatedly failed to be forthright in reporting the problem even after an accident in 2009 that killed a family of four.

Mr Holder said: "Rather than promptly disclosing and correcting safety issues ... Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress."

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, the company paid fines totaling more than $66m (£39.7m) for delays in reporting unintended acceleration problems.

On Wednesday, Toyota said it has "cooperated with the US Attorney's office in this matter for more than four years" and had "made fundamental changes to become a more responsive and customer-focused organisation, and we are committed to continued improvements".

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.

The National Highway Traffic Safety Administration never found defects in electronics or software in Toyota cars, which had been targeted as a possible cause.