Toyota Motor Corp. Slapped With Largest Fine in Automaker History

Toyota gets slapped with a huge $1.2 billion penalty as its four-year ordeal regarding unintended acceleration recalls comes to a close.

Mar 19, 2014 at 3:00PM

Staying on the taper path, the Federal Open Market Committee today said it would trim its monthly purchases of U.S. Treasuries and mortgage-backed securities from $65 billion to $55 billion. All three major U.S. stock indices were down on the committee's afternoon statement, with the Dow Jones Industrial Average (DJINDICES:^DJI)falling 44 points as of 3 p.m. EDT.

The Federal Reserve in recent months has moved away from its stance connecting the unemployment rate to its readiness to lift interest rates, and that trend continued today. While the unemployment rate has fallen faster than anticipated, it's mostly because of discouraged job hunters giving up the search. The Fed recognizes that issue and today announced that it would drop the unemployment rate as the primary measuring stick for the economy's strength. It will instead rely on a multitude of factors to decide when raising interest rates is the correct move. With that in mind, here are some large industrial companies making headlines today.


The First 787 Dreamliner to roll out at an accelerated production pace. Source: Boeing

Inside the Dow, Boeing (NYSE:BA) had a couple of favorable headlines hit the news feed today. Boeing and Comair announced an order for eight 737 MAX 8s, the first such order from an African operator. The order was actually booked in December 2013 but was previously unidentified on the Boeing orders and deliveries website; it is valued at $830 million at list prices. This order will support future fleet expansion for the brands operated by Comair. There's also an option for the carrier to take another eight aircraft in the future.

In other positive news for the aviation juggernaut, the Federal Aviation Administration announced today that the Boeing 787 Dreamliner is safe after a thorough review of its lithium-ion battery issues.

"We concluded that the aircraft was soundly designed, and that Boeing and the FAA had processes in place that were designed to identify and correct any issue that might arise during the manufacturing process," FAA Administrator Michael Huerta said, according to USA Today. "It's many layered. You don't have single points of failure."

This is welcome news for Boeing investors who have grown weary of the Dreamliner project running over budget due to production delays and other issues. As production of the 787 Dreamliner continues to accelerate, investors hope the project will become profitable for Boeing in 2016.

Outside the Dow, investors of General Motors are hoping that its recent recalls of millions of vehicles globally doesn't turn into a nightmare akin to Toyota's (NYSE:TM) unintended acceleration problems. Toyota just agreed to pay a $1.2 billion fine, which is the largest penalty imposed on any automaker, according to federal prosecutors. Ultimately, the defect led to a recall of more than 10 million vehicles and the company's admission to concealing information and making false statements regarding safety issues.

"Other car companies should not repeat Toyota's mistake," U.S. Attorney General Eric Holder warned in a statement, according to Automotive News. "A recall may damage a company's reputation, but deceiving your customers makes that damage far more lasting."

Toyota will record the $1.2 billion in after-tax charges against earnings. While this is a huge penalty it won't put a dent in the automaker's cash pile of nearly $60 billion. That said, this drawn-out process could have larger ramifications for its brand inside the automotive industry, where Toyota long ago captured the image of reliability and safety. While General Motors is beginning its own battle with ignition issues linked to at least 12 deaths, Toyota's tarnished image could open up the door for Ford to continue increasing its market share and positive brand image in the U.S. market. 

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Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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