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Hino Motors (TM-1.72%), a Toyota Motor Co. subsidiary, has agreed to plead guilty and pay a $1.6 billion fine as part of a settlement with several U.S. agencies over an emissions fraud scheme.
The Japanese automaker was charged with conspiracy to commit fraud in U.S. federal court in Detroit for unlawfully selling more than 105,000 heavy-duty diesel engines into the U.S. between 2010 and 2022 that failed to meet emission standards, according to court documents. It made about $1.087 billion from its actions.
The misconduct first came to light in March 2022, when employees were revealed to have tampered with test results on engines used in more than 643,000 vehicles, including tens of thousands subject to a recall. Toyota removed Hino from a major Japanese truck consortium, and four officials, including three executives overseeing production and compliance, resigned.
A committee commissioned to investigate the scandal blamed it on an environment in which workers were forced to meet a strict pace of work and engineers felt they couldn’t challenge their bosses. A poor work environment was also found at Toyota’s Daihatsu subsidiary as part of an investigation into its recent safety scandal that tormented the Japanese auto industry last year.
“Hino’s actions led to vast amounts of excess air pollution and were an egregious violation of our nation’s environmental, consumer protection and import laws,” Assistant Attorney General Todd Kim said in a statement.
As part of its agreement to resolve multiple civil and criminal allegations, Hino agreed to plead guilty to engaging in a multi-year conspiracy and serve a five-year probation, during which it will be prevented from importing diesel engines into the U.S. The deal is awaiting approval by a federal judge in Michigan.
Hino ran afoul of several federal agencies, including the Environmental Protection Agency, the FBI, and the Department of Transportation, along with the state of California. The settlement includes a criminal penalty of $521.76 million, $442.5 million in civil penalties, and $236.5 million to resolve claims brought by California.
In October, Hino booked a loss $230 billion yen, or about $1.54 billion, to cover the expected costs.
“This resolution is a significant milestone toward resolving legacy issues that we have worked hard to ensure are no longer a part of Hino’s operations or culture,” Hino CEO Satoshi Ogiso said in a statement, adding that the automaker has enacted several company-wide reforms to prevent future misconduct.
“We commit to moving forward as a company that can be of service to society,” Ogiso said.