Archive for Tuesday, April 6, 2010

Toyota faces $16M fine, accusations of hiding defect

April 6, 2010

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— The government accused Toyota of hiding a “dangerous defect” and proposed a record $16.4 million fine on Monday for failing to quickly alert regulators to safety problems in gas pedals on popular models such as the Camry and Corolla.

The proposed fine, an-nounced Monday by Transportation Secretary Ray LaHood, is the most the government could levy for the sticking gas pedals that have led Toyota to recall millions of vehicles. There could be further penalties under continuing federal investigations. The Japanese automaker faces private lawsuits seeking many millions more.

Toyota Motor Corp. has recalled more than 6 million vehicles in the U.S., and more than 8 million worldwide, because of acceleration problems in multiple models and braking issues in the Prius hybrid.

Documents obtained from the automaker show that Toyota knew of the problem with the sticking gas pedals in late September but did not issue a recall until late January, LaHood said. The sticking pedals involved 2.3 million vehicles.

“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in a statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”

For those reasons, LaHood said, the government is seeking a fine of $16.375 million, the maximum penalty possible. That dwarfs the previous record: In 2004, General Motors paid a $1 million fine for responding too slowly on a recall of nearly 600,000 vehicles over windshield wiper failure.

How Toyota decides to respond to the fines could pose a dilemma for the automaker. The company faces 138 potential class-action lawsuits over falling vehicle values and nearly 100 personal injury and wrongful death cases in federal courts nationwide. If Toyota pays the fines, the admission could hurt it in courtrooms. But battling the government over the penalties could undermine the automaker’s attempts to move on from the recalls.

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