Toyota Agrees To $1.2B Settlement To End Criminal Probe On Unwanted Increased Acceleration In Its Vehicles

 @SnehaShankar30
on March 19 2014 3:30 AM
Toyota
Women walk in front of Toyota Motor's logo at the company's showroom in Tokyo on March 12, 2014. Reuters/Toru Hanai

Japanese automaker Toyota (NYSE:TM) has signed a $1.2 billion settlement with U.S. investigators to end a criminal probe into its handling of problems with its vehicles that involved a sudden and automatic increase in acceleration, media reports said Wednesday, citing sources.

More than 400 customers had filed a lawsuit against the company for $1.6 billion, stating economic losses and causing Toyota to recall more than 10 million vehicles worldwide between 2009 and 2010. Toyota had settled 131 cases by March 17 and is trying to settle 300 more, Bloomberg reported, citing a status report filed in Santa Ana, Calif. Over the past four years, U.S. investigators have been examining how Toyota dealt with driver complaints about a sudden increase in acceleration in its vehicles and whether the company made incomplete disclosures.

“Toyota has cooperated with the U.S. Attorney’s office in this matter for more than four years,” Steve Curtis, a spokesperson for Toyota, said according to Bloomberg. “During that time, we have made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements.”

The Department of Justice also found that Toyota had made misleading statements to the U.S. government and the public about safety problems in its vehicles, which came to light during the company's internal audit.

The National Highway Traffic Safety Administration, NHTSA, said in 2010 that five people had died as a result of accidents due to unwanted acceleration, according to the Wall Street Journal. Toyota has been fined four times by the NHTSA for a total of $66.2 million, for not reporting safety defects to the government, out of which three fines were related to unwanted acceleration.

In February, the company had recalled 2.1 million vehicles worldwide due to a software problem, which led to sudden stops in models such as the Prius, RAV4, Tacoma and Lexus. Since 2009, Toyota recalls have affected more than 14 million vehicles worldwide.

The automaker, which faces investigations by two congressional committees, the NHTSA and a criminal inquiry by a Manhattan U.S. attorney's office, is expected to avoid criminal charges under the terms of the latest settlement.

Toyota’s settlement closely follows a federal government investigation into General Motors, or GM, (NYSE:GM) over the company's handling of decade-long problems involving faulty ignition switches and malfunctioning airbags. The problems have forced Detroit-based GM to recall more than 3 million vehicles in the last two months.

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