Fines that Department of Justice levied on Toyota Motor and was expected to issue to General Motors will lead the two automakers to offer incentives for consumers in the short term, experts say.
Toyota was fined $1.2 billion in March 2014 for knowingly withholding information about acceleration problems on Toyota vehicles, which has been linked to the deaths of at least 37 people. GM is likely to be fined for its failure to recall properly 2.6 million vehicles because of ignition problems and air-bag-deployment failures that led to the deaths of 13 people, according to Pauliana Lara of Consumer Action Law Group.
As of April 2014, GM was being fined $7,000 per day by National Highway Traffic Safety Administration until it provided NHTSA with requested information regarding the recalls. Lara says this is a separate penalty that doesn’t include possible fines from Department of Justice.
Lara believes that Toyota will lower interest rates and offer cash-back incentives and shorter leases (27 months). She wouldn’t rule out the possibility that the company would reduce MSRPs on top-selling models, such as the Camry and the Prius, in 2014. She says she wouldn’t be surprised if GM received a smaller fine than Toyota did, because it was more proactive in recalling its vehicles. Therefore, GM might offer consumers fewer deals than Toyota would. She didn’t guess what types of deals consumers could expect.
Sean McAlinden of Center for Automotive Research says both automakers will raise the MSRP on their vehicles in the long term to make up for the fines, litigation fees and other costs.