Toyota Motor Corp., the worlds largest car manufacturer, is coming close to finalizing a $1-billion deal to settle a US criminal investigation of how the company disclosed customers complaints regarding unintended acceleration, which allegedly cost the life of several people back in 2009.
The Wall Street Journal reported on Friday, citing anonymous sources, that the company might reach a deal with US authorities within weeks, putting an end to a four-year probe, but some yet unresolved sticking points could still cause the deal to fall through.
The unintended acceleration issue gained attention nationwide after an off-duty California Highway Patrolman tilted off the highway at around 120 miles per hour in a borrowed Lexus, resulting in the death of him and his family. A passengers last-minute 911 call captured the drivers frenzied effort to regain control over the vehicle.
The company received afterwards hundreds of complaints over the same issue and faced numerous lawsuits. In February 2010, Akio Toyoda, Toyota Motor Corps President, was summoned before Congress to testify on the matter.
Since the highway accident, the company recalled 12.4 million vehicles worldwide and 10.2 million in the US alone related to issues with unwanted acceleration, in an attempt to retain its reputation.
The company is facing 500 individual lawsuits claiming personal injuries or property damage and more than 200 proposed class action lawsuits.
A settlement on the issue may be reached despite the fact the carmaker has consistently rebutted attorneys claims that its vehicles are defective, arguing that misplaced floor mats caused some of the accidents as they trapped the acceleration pedal. Toyota hasnt admitted wrongdoing in any of the lawsuit for unintended acceleration.
Moreover, federal safety officials at the National Highway Traffic Safety Administration and NASA have concluded that there is no link between Toyotas electronic throttle control system and the reported issues. The NHTSA determined that operator error or floor mats pushing on the pedals were involved in most accidents. However, Toyota has been fined four times by the NHTSA in the last three years for not reporting safety defects to the government in time. Three of those fines were linked to issues regarding unintended acceleration.
As reported by the Wall Street Journal, prosecutors in the Manhattan U.S. attorneys office are probing whether the Japanese carmaker made false or incomplete disclosures to U.S. regulators about possible car defects, citing people with knowledge on the matter. They are also investigating possible wire and mail violations related to those presumably false disclosures. The negotiated $1-billion fine is a subject of change, and may vary from the final agreement.
Julie Hamp, a Toyota spokesman, said, cited by the Wall Street Journal: “Toyota continues to cooperate with the U.S. attorneys office in this matter. And in the nearly four years since this inquiry began, weve made fundamental changes to become more responsive and customer focused and were committed to continue to improve.”
Toyota Motor Crop rose by 1.99% in Tokyo on Friday to settle at 5 900 JPY per share, marking a one-year change of +22.53%.
Shares jumped by 1.22% in New York, settling at $117.38. According to CNN Money, the 20 analysts offering 12-month price forecasts for Toyota Motor Corp have a median target of $154.74, with a high estimate of $184.14 and a low estimate of $121.44. The median estimate represents a +31.83% increase from the last close.
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