Toyota Motor Corp (ADR) (NYSE:TM) Bulletproof Image Comes Down

Boston, MA 03/19/2014 (wallstreetpr) – Three months into 2014 and just a couple of weeks into its full year 2014 financial reporting, Toyota Motor Corp (ADR) (NYSE:TM) is witnessing things unfold the wrong way. Things were never as bad at the Japanese automaker until it sort of started becoming mean with the truth about the safety of its machines. Now the company faces the largest penalty ever imposed on an automaker according to the U.S. Justice Department.

After about four years of investigations into the company’s handling of customer complaints, Toyota has been unmasked for running an organization that besides seeking profit is good at ignoring serious safety issues in its Lexus and Toyota vehicles. And because of that, the company – under a deal that calls for meeting of certain conditions – will pay $1.2 billion to the U.S Justice Department.

Defrauding consumers

Toyota Motor Corp (ADR) (NYSE:TM) already faces many lawsuits filed against it by its customers. But in the latest case, the company is being taken to task for making misleading statements regarding the safety of its vehicles; more so about the unintended acceleration and faulty pedals which have lead to deaths. The company has admitted its bad practice and said that it hopes the settlement marks an important step to place the bad story behind it.

As disclosed in the investigations, Toyota was more after protecting profits than the lives of its users. That is why it failed to carry out full-throat recall of the vehicles which had the unintended acceleration problem. In any case, it took steps to ensure that conceal information about other safety issues that were discovered in its vehicles.

The safety issues that have led to the latest settlement became public in 2009, and that followed the crash in San Diego that led to the death of four family members.

More harm than good

Now that Toyota Motor Corp (ADR) (NYSE:TM) has been exposed, the problems that it tried to sweep under the carpet are likely to cost more than it has been able to save. The company was losing its grip of the U.S. auto market because of safety issues, but nothing like it which caused that loss of market was in the scale of the latest exposure. So then, with a bulletproof image going down and competition getting intense, the Japanese automaker must find a way to redefine itself to keep a profitable business in the U.S. auto market.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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