Toyota to Pay $1.2B for ‘Shameful’ Recall Actions
In the scope of auto industry recalls, it would be difficult to top the millions of vehicles Toyota (NYSE:TM) had to bring back into the shop as a result of the unintended acceleration issues that led to dozens of deaths and countless accidents over the years. The case finally found resolution on March 19, when Toyota accepted a $1.2 billion penalty – a record for the industry — as well as a rare admittance of guilt and a period of probation. U.S. Attorney General Eric Holder called Toyota’s actions “shameful” in announcing the settlement.
Such public floggings are rare for automakers, but Toyota bore the brunt of several top U.S. officials during the announcement of the $1.2 billion fine. U.S. Transportation Secretary Anthony Foxx warned the industry about the “serious consequences” automakers face when not following proper recall protocol, while U.S. Attorney Preet Bharara of New York lambasted Toyota, saying “it cared more about savings than safety and more about its own brand and bottom line than the truth.”
As part of the agreement between the U.S. Department of Justice and Toyota Motor Corp., the automaker will pay the $1.2 billion penalty, make an uncommon admission of wrongdoing, and subject itself to an independent monitor for a period of three years while a charge of commercial wire fraud stands against the company. Should Toyota fulfill its obligations to the Justice Department, U.S. attorneys will move to dismiss the charges they have filed in three years from the March 2014 settlement.
The judge who presided over the settlement in court hinted that Toyota may not be out of the woods even after the imposition of this landmark penalty.