Toyota nears $1 bn settlement over mishandling unintended acceleration recalls

Toyota Motor Corp is close to finalising a deal agreeing to pay $1 billion to settle a US federal criminal investigation into unintended acceleration problem in some vehicles in 2009, The Wall Street Journal reported over the weekend, citing anonymous sources.

The paper said the Japanese automaker is close to reaching a deal with the US authorities within weeks on allegations that the company withheld information or issued false information on unintended acceleration in Toyota vehicles that led to it recalling 10.2 million vehicles in the US.

New York Attorney Preet Bharara is investigating whether Toyota made false or incomplete disclosures to the US National Highway Traffic Safety Administration (NHTSA) on potential defects in its vehicles and is also examining whether it the company violated mail and wire fraud laws regarding the alleged false disclosures.

The deal that would cost the world's largest automaker around $1 billion to end the four-year probe could still fall apart since some sticking points have yet to be resolved, WSJ said.

''Toyota continues to cooperate with the US attorney's office in this matter,'' said Toyota spokeswoman Julie Hamp. ''And in the nearly four years since this inquiry began, we have made fundamental changes to become more responsive and customer focused and we are committed to continue to improve.''

Between 2009 and 2011, Toyota recalled 12.4 million vehicles worldwide, including 10.2 million in the US, due to defective accelerator pedals that caused its vehicles to accelerate unintentionally (See: Toyota's latest 1.5-million recall tops 12.5 million globally).

The company received hundreds of complaints and is facing around 200 proposed class action and 500 individual lawsuits over this issue, which came as a shock to Toyota since its customers associated it with having excellent quality and reliability.

The NHTSA in 2010 already fined Toyota $16.4 million for delaying the recall of vehicles with defective accelerator pedals by alleging that the company was aware of the problem much earlier.

Last it agreed to pay $1.6 billion to settle a 2010 class-action lawsuit bought on by its customers who claimed the recalls led to the resale value of their vehicles plunging. (See: Toyota to pay US customers $1.6-bn for fall in value of cars due to acceleration problems)

This settlement was the largest-ever auto civil settlement in history.