Toyota agreed to pay $1.2bn on Wednesday to end a US criminal investigation into misleading statements the car company made about safety issues in Toyota and Lexus vehicles after a series of crashes.
The deal, announced by the Department of Justice, caps a four-year investigation on the way Toyota disclosed issues related to allegations of sudden acceleration in its cars in the late 2000s.
At a press conference, attorney general Eric Holder called Toyota’s behaviour “shameful” and said the company had deliberately concealed issues with its vehicles from the authorities.
Sporadic reports of unintended acceleration gained national attention in the US 2009 after off-duty California highway patrolman Mark Saylor and three family members were killed when he lost control of the Lexus ES 350 he was driving.
Saylor’s brother-in-law made a frantic 911 ahead of the crash saying: “We’re in a Lexus … and we’re going north on 125 and our accelerator is stuck .… there’s no brakes … we’re approaching the intersection … Hold on … hold on and pray … pray.”
Investigators determined the accident was caused by an improperly installed floor mat that trapped the gas pedal. Shortly after Toyota recalled 3.8m cars and trucks to replace their gas pedals with a design less susceptible to interference from floor mats. But it knew of another problem relating to some US-manufactured pedals that caused them to stick, failed to alert investigators and did not inform the public.
“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress,” said Holder.
“When car owners get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact. 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.”
In a prepared statement, Toyota said it had overhauled its procedures in an attempt to win back the trust of consumers. Christopher Reynolds, its chief legal officer for north America, said: “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. In the more than four years since these recalls, we have gone back to basics at Toyota to put our customers first.”
The fine is the largest ever imposed on an auto maker, and includes a deferred prosecution agreement, which allows Toyota to avoid criminal charges provided it meets conditions imposed by the court. An independent monitor will review and assess Toyota’s policies, practices and procedures relating to public safety statements and its reporting obligations.
According to the National Highway Traffic Safety Administration (NHTSA), five people died as a result of accidents involving claims of unwanted acceleration. The NHTSA’s investigations determined that driver error or floor mats trapping accelerator pedals were involved in most accidents and did not find any evidence of electronic fault.
Toyota deceived the NHTSA, said the Justice Department, when it claimed improperly secured or incompatible all-weather floor mats trapping a depressed gas pedal were the “root cause” of cars accelerating to a high speed.
At the same time as the company claimed to have identified the primary issue, Toyota knew it had another problem relating to pedals manufactured by a US manufacturer, unnamed by the US authorities, and installed in many Toyota brand vehicles in north America as well as Europe. Plastic material inside the pedals were causing some accelerator pedals to become stuck in a partially depressed position.
The sticky pedal issue first surfaced in Europe in 2008, and the company told dealers to replace the pedals if customers complained with one made by a rival to the unnamed US pedal manufacturer.
However, the company did not inform the US authorities of the issue – even though sticky pedal incidents were being reported in the US. But after the Saylor crash, Toyota decided to hide the stick pedal issue from the NHTSA, said the justice department. The company quietly cancelled a planned design change in order not to create a paper trail that would be picked up by the US authorities, said the justice department.
In 2009, responding to media allegations that the company had hidden defects in its cars, Toyota issued the following statement: “Toyota has absolutely not minimized public awareness of any defect or issue with respect to its vehicles. Any suggestion to the contrary is wrong and borders on irresponsibility. We are confident that the measures we are taking address the root cause and will reduce the risk of pedal entrapment.”
“In fact, Toyota had ‘minimized public awareness of’ both sticky pedal and floor-mat entrapment,” said the Justice Department.
“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” said Preet Bharara, US attorney for the southern district of New York. “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress.”
The auto maker has been fined a total of $66.2m by NHTSA for failing to report safety defects to the government.
The settlement comes after General Motors has recalled 3.3m vehicles in four separate recalls that have been linked to a dozen deaths. Those recalls are now subject to a federal investigation that has shown GM employees first identified the problems a decade ago.
GM chief executive Mary Barra said Tuesday: “Something went wrong with our process in this instance, and terrible things happened.”
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