By David Shepardson
(Reuters) -Toyota Motor unit Hino Motors has agreed a $1.6 billion settlement with U.S. agencies and will plead guilty over excess diesel engine emissions in more than 105,000 U.S. vehicles, the company and U.S. government said on Wednesday.
The Japanese truck and engine manufacturer was charged with fraud in U.S. District Court in Detroit for unlawfully selling 105,000 heavy-duty diesel engines in the United States from 2010 through 2022 that did not meet emissions standards.
The settlement, which still must be approved by a U.S. judge, includes a criminal penalty of $521.76 million, $442.5 million in civil penalties to U.S. authorities and $236.5 million to California.
A company-commissioned panel said in a report in 2022 Hino had falsified emissions data on some engines going back to at least 2003.
Hino agreed to plead guilty to engaging in a multi-year criminal conspiracy and serve a five-year term of probation, during which it will be barred from importing any diesel engines it has manufactured into the U.S., and carry out a comprehensive compliance and ethics program, the Justice Department and Environmental Protection Agency said.
Assistant Attorney General Todd Kim said Hino "falsified data for years to skirt regulations" adding the company'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."
The settlement includes a mitigation program, valued at $155 million, to offset excess air emissions from the violations by replacing marine and locomotive engines, and a recall program, valued at $144.2 million, to fix engines in 2017-2019 heavy-duty trucks
The EPA said Hino admitted that between 2010 and 2019, it submitted false applications for engine certification approvals and altered emission test data, conducted tests improperly and fabricated data without conducting any underlying tests.
Hino President Satoshi Ogiso said the company had improved its internal culture, oversight and compliance practices.
"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," he said in a statement.
The California Air Resources Board began an investigation in 2019 when Hino’s certification applications were reviewed and found inconsistencies in the emissions data.
"Hino knowingly took unlawful advantage of California’s incentives designed to accelerate the adoption of clean transportation technologies, which safeguard the health and safety of Californians from pollution,” said California Attorney General Rob Bonta.
Hino said it booked an extraordinary loss of 230 billion yen, or about $1.54 billion, in its second quarter results in October to cover the expected costs of resolving the litigation.
Over the last decade, several automakers admitted to selling vehicles with excess diesel emissions, including Volkswagen (ETR:VOWG_p) which paid more than $20 billion in fines, penalties and settlements after it admitted in 2015 it had cheated emissions tests by installing "defeat devices" and sophisticated software in nearly 11 million vehicles worldwide.