WASHINGTON (AP) — The government announced a $1.2 billion
settlement with Toyota Motor Corp. on Wednesday 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 U.S., totaling more than 10
million vehicles for various problems including faulty brakes, gas
pedals and floor mats. From 2010 through 2012, Toyota Motor Corp. paid
fines totaling more than $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.
Starting in
2009, Toyota issued massive recalls, mostly in the U.S., totaling more
than 10 million vehicles for various problems including faulty brakes,
gas pedals and floor mats. From 2010 through 2012, Toyota Motor Corp.
paid fines totaling more than $66 million for delays in reporting
unintended acceleration problems.
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 U.S. market share as competition has intensified.
Last year,
Toyota agreed to pay more than $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 U.S. lawsuits, but other cases aren’t included in the talks.
The
negotiations come less than two months after an Oklahoma jury awarded
$3 million in damages to the injured driver of a 2005 Camry and to the
family of a passenger who was killed.
The ruling was significant
because Toyota had won all previous unintended acceleration cases that
went to trial. It was also the first case where attorneys for plaintiffs
argued that the car’s electronics — in this case the software connected
to a midsize Camry’s electronic throttle-control system — were the
cause of the unintended acceleration.
At the time, legal experts
said the Oklahoma verdict might cause Toyota to consider a broad
settlement of the remaining cases. Until then, Toyota had been riding
momentum from several trials where juries found it was not liable.
Toyota
has blamed drivers, stuck accelerators or floor mats that trapped the
gas pedal for the acceleration claims that led to the big recalls of
Camrys and other vehicles. The company has repeatedly denied its
vehicles are flawed.
No recalls have been issued related to
problems with onboard electronics. In the Oklahoma case, Toyota
attorneys theorized that the driver mistakenly pumped the gas pedal
instead of the brake when her Camry ran through an intersection and
slammed into an embankment.
But after the verdict, jurors told AP they believed the testimony of an expert who said he found flaws in
the car’s electronics.
Toyota
also had to pay millions for recalls, as well as a series of fines
totaling $68 million to the NHTSA, the U.S. government’s road safety
watchdog, for being slow to report acceleration problems.
Still,
the payments won’t hurt Toyota’s finances very much. In its last fiscal
quarter alone, Toyota posted a $5.2 billion profit, crediting a weak yen
and strong global sales.
Toyota’s U.S. market share, however, has
fallen more than 4 percentage points since unintended acceleration came
to the forefront in August of 2009, when a California Highway Patrol
officer and three others were killed in a fiery crash. The officer’s
runaway car was traveling more than 120 mph when it crashed and burst
into flames. One of his family members called police about a minute
before the crash to report the vehicle had no brakes and the accelerator
was stuck.
At the time, Toyota controlled 17.8 percent of the
U.S. market. Gas prices were high, playing to Toyota’s fuel-efficient
small cars and hybrids. Detroit automakers were in serious financial
trouble and had few fuel-efficient cars for sale.
By last month,
though, Toyota’s share fell to 13.3 percent, according to Autodata
Corp., as the company faced intense competition in small and midsize
cars from resurgent Detroit automakers and Korean brands Hyundai and
Kia.
The Toyota criminal charge and settlement could foreshadow
what’s in store for General Motors. The same U.S. attorney’s office is
investigating the Detroit auto giant for its slow response to a faulty
ignition switch problem in older compact cars that has been linked to at
least 31 crashes and 12 deaths. NHTSA also is investigating whether GM
withheld information about the problem and could fine the automaker $35
million.
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Krisher contributed from Detroit
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