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.
“I sincerely hope that this is not the end but rather a beginning to seek to hold those individuals responsible for making those decisions accountable,” said U.S. District Judge William Pauley, Bloomberg reports. Pauley framed Toyota’s actions in the harshest way possible, saying it was an example of how “corporate fraud can kill.”
In terms of effects on Toyota’s business, auto analysts have remarked on the company’s efficiency in bearing the brunt of the scandal. Though Toyota lost its place on top of the auto industry as a result of the bad press from the unintended acceleration recall, it quickly retook the top spot from General Motors (NYSE:GM) and is expected to post record profits in 2014.
The announcement by U.S. DoJ officials served a double purpose of warning automakers of the consequences of misleading the public with respect to auto safety. General Motors’ current recall situation hung in the background of the announcement throughout the event. None of the government officials would comment on the current investigation into GM’s behavior with respect to the ignition switch recall.