UPDATE: Toyota to Pay $1.2 Billion to Settle Recall Probe

Toyota Motor Corp. has agreed to pay a $1.2 billion civil fine and admit it deceived its U.S. customers about safety defects related to unintended acceleration that led to the recall of 10 million vehicles in 2009-2010.

The settlement with the U.S. Dept. of Justice is the largest ever with a carmaker. The deal avoids criminal prosecution and will require Toyota to accept monitoring of its consumer communication policies by an outside watchdog.

Toyota says it will book a $1.2 billion charge against earnings for the current fiscal year ending March 31. Last year the company agreed to pay as much as $1.6 billion more to customers who claimed the resale value of their vehicles were hurt by the 2009-2010 recalls.

U.S. Attorney General Eric Holder used the Toyota settlement to make a veiled warning to General Motors Co., declaring that "other car companies should not repeat Toyota's mistake." GM is the subject of several probes into its 13-year delay in recalling defective ignition switches linked to 12 fatalities.

Holder declined to say if the Justice Dept. plans similar action against GM. But he described the Toyota settlement as an indication of the "progressive nature" of the department's approach to such cases.