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NEWS
Toyota agrees to $1.3 billion settlement
Record recall settlement between Toyota and US Justice Department could have ramifications for General MotorsToyota will pay a record $US1.2 billion ($A1.32b) settlement following a criminal investigation into its handling of the company’s 2009-2010 recalls to fix sticking accelerator pedals and faulty floor mats in more than 10 million vehicles.
As part of the settlement between the Japanese giant and the US Justice Department, Toyota admitted it misled North American consumers by concealing and making deceptive statements over two safety issues that resulted in unintended acceleration.
The Toyota deal had been expected for more than a month and resolves issues that have plagued the company since at least 2007. The company’s 2009-2010 recalls have been linked to at least five deaths and the car-maker still faces hundreds of private lawsuits over the problems.
Under the agreement, the US government agreed to defer prosecution and then dismiss its case, as long as Toyota makes the required payment, abides by the terms of the agreement and continues to cooperate with the government.
The agreement also provides for an independent monitor to review policies and procedures relating to Toyota’s safety communications process, its process for internally sharing vehicle accident information and its process for preparing and sharing certain technical reports.
Toyota says it has taken a number of "substantive actions" voluntarily since the recalls, including launching rapid-response teams to investigate customer concerns quickly, improving its quality control process, expanding its network of field quality offices to improve customer responsiveness and extending the new vehicle development cycle by four weeks to help ensure reliability and safety.
Toyota also committed $50 million in 2011 to launch the Collaborative Safety Research Center in Ann Arbor, Michigan to partner with more than 16 universities and institutions across North America on safety advances that will be shared to benefit the entire auto industry and society.
In a bid to enhance regional autonomy, Toyota also named the first American CEO of its North American region as well as Chief Quality Officers for North America and other principal regions, all of whom have direct lines to TMC President Akio Toyoda.
"At the time of these recalls, we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust," said Christopher Reynolds, Toyota Motor North America’s chief legal officer.
"In the more than four years since these recalls, we have gone back to basics at Toyota to put our customers first. 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.
"Specifically, we have taken a number of steps that have enabled us to enhance quality control, respond more quickly to customer concerns, strengthen regional autonomy and speed decision-making. And, we’re committed to continued improvement in everything we do to keep building trust in our company, our people and our products.
"Importantly, Toyota addressed the sticky pedal and floor mat entrapment issues with effective and durable solutions, and we stand behind the safety and quality of our vehicles.
"Entering this agreement, while difficult, is a major step toward putting this unfortunate chapter behind us. We remain extremely grateful to our customers who have continued to stand by Toyota. Moving forward, they can be confident that we continue to take our responsibilities to them seriously," said Reynolds.
US industry experts say Toyota’s settlement could provide a model for the way in which authorities there may approach a similar investigation into General Motors, which this week recalled more than 1.5 million vehicles more than a decade after it became aware of an ignition switch failure linked to a dozen deaths.
"My hope and expectation is that this resolution will serve a model for how to approach future cases involving similarly situated companies," said US Attorney General Eric Holder in a news conference on Wednesday.
"Other car companies should not repeat Toyota’s mistake. A recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting."
The same US Attorney prosecutors that handled the Toyota case in New York are also investigating the handling of the ignition-switch recall by GM, which also faces inquests by Congress and the National Highway Traffic Safety Administration, as well as at least three proposed class-action lawsuits.
"There is absolutely no excuse for misleading the public or concealing information from the National Highway Traffic Safety Administration," said US senator Jay Rockefeller, who chairs the Senate Committee on Commerce, Science and Transportation.
"Lives are at risk when this happens. Safety must always be the first priority for manufacturers, regardless of how it affects profit margins."
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Written byCarsales Staff
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