Toyota Motor Corporation’s (JP:7203) unit Hino Motors (JP:7205) has reached a $1.6 billion settlement over the diesel emissions fraud case in the U.S. The settlement, pending approval by a U.S. judge, includes a criminal fine of $521.76 million and $679 million in civil penalties. Investors reacted positively to the settlement announcement, driving Hino Motors’ shares up by 9.5% in today’s trading session. Meanwhile, Toyota Motor shares fell by 2.21%.
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Based in Japan, Hino Motors is a manufacturer of commercial vehicles and diesel engines. The company operates as a subsidiary of Toyota Motor Corporation.
Hino Motors Pleads Guilty in Emissions Scandal
Hino Motors has pleaded guilty to fraud charges for selling 105,000 heavy-duty diesel engines in the U.S. from 2010 to 2022 that did not meet emissions standards. Meanwhile, a report from a company-commissioned panel in 2022 revealed that Hino had been falsifying emissions data on some of its engines as far back as 2003.
As part of the settlement, the company will be on probation for five years. During this time, it will not be allowed to import any diesel engines it has made into the U.S. Additionally, Hino must create and follow a program focused on ensuring it meets legal and ethical standards, as required by the Justice Department and the Environmental Protection Agency.
The settlement also includes a $155 million mitigation program to reduce excess air emissions by replacing marine and locomotive engines, as well as a $144.2 million recall program to fix engines in 2017-2019 heavy-duty trucks.
On the other hand, Hino Motors sees this resolution as an opportunity to resolve its past compliance issues and implement reforms to prevent future problems. The company will continue operating and selling new trucks in the U.S. with third-party engines.
Is Toyota Stock a Good Buy?
On TipRanks, 7203 stock has received a Moderate Buy rating based on five Buy and two Hold recommendations by analysts. The Toyota share price target of ¥3,221.43 implies a growth rate of 13.5% in the share price.
