Toyota Unit Hino Motors To Pay $1.6 Billion In US Emissions Test Settlement

A U.S. District Court had charged Hino Motors with the fraudulent sale of engines that did not meet the required emission limits between 2010 and 2022 in the country.

The Hino Motors unit of Toyota Motors has pleaded guilty over excessive diesel engine emissions and must pay US agencies a settlement of $1.6 billion. The US government and the Japanese truck manufacturer announced on Wednesday that 105,000 heavy-duty diesel engines that were sold in the US had not met emission standards.

A U.S. District Court in Detroit had charged the company with the fraudulent sale of engines that did not meet the required emission limits between 2010 and 2022 in the country. The settlement includes a criminal penalty of $521.76 million, $442.5 million in civil penalties to U.S. authorities, and $236.5 million to California, and is yet to be approved by a US judge.

According to the Justice Department and Environmental Protection Agency, Hino has pleaded guilty to orchestrating a multi-year criminal conspiracy and will serve a five-year-long probation. During this probationary period, Hino will be prevented from importing diesel engines it manufactures into the US, and the unit is also required to carry out a comprehensive compliance and ethics program.

The settlement includes a mitigation program that is valued at $155 million to offset the excess air emissions, which would include the replacement of marine and locomotive engines. A recall program valued at $144.2 million, to fix engines in heavy-duty trucks that were manufactured between 2017-2019 is also part of this big settlement.

Hino President Satoshi Ogiso said that through this resolution, legacy issues that are no longer part of the company’s operating culture can be rectified. Ogiso assured that the company’s internal culture, compliance and oversight practices have since improved.

Hino reported a loss of $1.54 billion in its second quarter to cover the cost of this litigation. According to California Attorney General Rob Bonta Hino had taken unlawful advantage of the state’s policies that are incentives to improve clean transportation technology. Suspicions arose in 2019 when an investigation by the California Air Resources Board revealed inconsistencies in the emission data of Hino’s certification applications.

A panel commissioned by Toyota said in a 2022 report that Hino was falsifying emission reports of certain engines as far back as 2003. Assistant Attorney General Todd Kim said that to bypass regulations, Hino had been falsifying documents for years which contributed to excessive air pollution and was a gross violation of the environmental, consumer protection, and import laws in the US.

The 2022 report declared that the company’s environment was not conducive to making engineers challenge their superiors, which is a rare criticism of Japan’s work culture. The report also contained details of a rigid atmosphere that threatened the ‘psychological safety’ of the employees. When the report was released, Ogiso had admitted that in a bid to expand its scale and volume, Hino had ignored quality, compliance, and talent development.

In the past decade, Toyota has joined the long list of automakers accused of data falsification to sell excess diesel emission engines. Companies like Mazda, Suzuki, Yamaha, and Volkswagen have come under fire for non-compliance with transport and environmental regulations. Volkswagen alone has paid more than $20 billion in fines, penalties, and settlements for cheating emission tests.

In 2024, Japan’s transport ministry found that these companies had once again manipulated emission test data, and Toyota, Mazda, and Yamaha in particular were ordered to halt the shipments of certain vehicles. With the news breaking out, Toyota shares plummeted by more than 5.4%, with the company losing $15.62 billion in market value merely a week later. Toyota Chairman Akio Toyoda blamed the irregularities in certification applications on the fact that the company’s emission tests were conducted using testing methods that were different from the standard set by the government.

With Hino pleading guilty and accepting this new settlement, Toyota-Hino shares are bound to suffer, and production will certainly take a hit, and this could cause an even further slump in the automotive industry.