Under the agreement, announced Wednesday by U.S. Attorney General Eric Holder, the company will admit that it misled U.S. consumers by making deceptive statements about two safety issues affecting its vehicles. As a result, Toyota will pay a $1.2-billion financial penalty under a "deferred prosecution agreement."
An independent monitor will also review policies, practices and procedures related to reporting and recalls at Toyota as part of the agreement.
"Rather than promptly disclosing and correcting safety issues ... Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress," Holder said at a news conference, adding that the penalty is the largest ever imposed on an automotive company by the U.S.
Toyota said that at the time of the recalls, "we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust," said Christopher P. Reynolds, chief legal officer of Toyota Motor North America.
Toyota said it had "made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements."
Beginning in 2009, Toyota has issued massive recalls totalling more than 10 million vehicles for various problems including faulty brakes, ‘sticky’ gas pedals, and floor mats. Between 2010 and 2012, Toyota paid more than $66 million in fines for delays in reporting problems with unintended acceleration.
The National Highway Traffic Safety Administration never found defects in electronics or software in Toyota cars, which had been targeted as a possible cause.
Toyota's damaged reputation
The settlement is the latest in a string of bad publicity for Toyota, which had its sterling safety reputation shattered by the unintended acceleration recalls that began in 2009. As a result, it has seen its market share in the U.S. and Canada drop.
Since the recalls, Toyota has slowly regained public trust, and was the world’s top-selling automaker in 2013, holding off strong competition from GM and Volkswagen.
Last year, Toyota agreed to pay more than $1 billion to resolve hundreds of lawsuits claiming that owners of its cars suffered economic losses because of the recalls. But that settlement did not include wrongful death and injury lawsuits that have been consolidated in California state and federal courts.
Toyota has blamed drivers, stuck accelerators or floor mats that trapped the gas pedal for the acceleration claims that led to the big recalls of Camrys and other vehicles. The company has repeatedly denied its vehicles are flawed.
Over the past few years, Toyota has also had to pay millions of dollars for recalls.
Still, the payments are unlikely to hurt Toyota's finances much. In its last fiscal quarter, Toyota posted a $5.2-billion profit, crediting a weak yen and strong global sales.