JAPAN & US: Toyota To Agree To $16.4 Million Fine

April 19, 2010

by The Associated Press

Toyota Motor Corp. is expected to agree to a fine of more than $16 million, the largest government penalty levied against an automaker, for a four-month delay in telling federal authorities about defective gas pedals on its vehicles, a Transportation Department official said Sunday.

Toyota faces a Monday deadline to accept or contest the $16.4 million fine over evidence it knew about sticking gas pedals in September but did not issue a recall until January.

The Transportation official was not authorized to speak publicly and spoke only on condition of anonymity. The official said Toyota is expected to pay the full amount of the assessed fine within 30 days as a means of avoiding going to court against the government.

The official said Toyota did not intend to accept liability explicitly. But from the government's viewpoint, the official said, the agreement to pay the full fine constituted an acceptance of responsibility for hiding the safety defect in violation of the law.

Toyota did not immediately comment on the fine. Under federal law, automakers are required to notify the government within five business days when they find a potential safety defect.

Toyota announced it would recall 2.3 million vehicles in January to address sticking pedals on popular vehicles such as the Camry and Corolla. The Japanese automaker has recalled more than 8 million vehicles worldwide because of acceleration problems in multiple models and braking issues in the Prius hybrid.

Concerns about sticking gas pedals and complaints from Toyota owners in the U.S. were rising at the end of 2009, according to chronologies of the investigation Toyota provided to the government.

The National Highway Traffic Safety Administration said documents provided by Toyota showed the automaker had known about the sticky pedal defect at least since Sept. 29, 2009, when it issued repair procedures to distributors in 31 European countries to address complaints of sticking pedals, sudden increases in engine RPM and sudden vehicle acceleration.

The documents also showed that Toyota knew that owners in the United States had experienced the same problems.

The Japanese automaker has been weighing its options since the fine was announced in early April but analysts expected it to pay the penalty.

The company has been named in 138 potential class-action lawsuits over falling vehicle values and about 100 personal injury and wrongful death cases in federal courts. Federal prosecutors and the Securities and Exchange Commission are conducting investigations related to the recalls.

"When you look at the toll it's taken on Toyota's reputation, when you look at the number of vehicles involved, when you look at the hardship it's placed on Toyota's customer base, it's only right for Toyota to take this fine," said Dennis Virag, president of Automotive Consulting Group based in Ann Arbor, Mich.

Transportation officials have not ruled out additional fines. The department is reviewing whether Toyota delayed for six weeks the late January recall of the 2009-2010 Venza in the United States to address floor mats that could entrap the accelerator pedal after making a similar recall in Canada.

Toyota recalled the Venza in Canada in December and reported to the U.S. government on Dec. 16 that the floor mats could move forward while the vehicle is in use and "may interfere with the accelerator pedal."

Toyota told U.S. authorities at the time that the floor mats in question were not imported into the U.S. but the Venza was added to the floor mat recall in late January.

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