Toyota to pay record $16.4 million fine

by Peter Valdes-Dapena, senior writer


NEW YORK (CNNMoney.com) -- Toyota Motor Corp. has agreed to pay a record $16.4 million fine for allegedly failing to notify the Department of Transportation (DOT) of a "sticky pedal" defect in its cars for at least four months after learning of the problem.

The fine, which could have been many times larger had it not been for caps on such penalties, does not mark an end of the repercussions from Toyota's recent spate of safety-related quality issues. Other investigations and lawsuits still loom.

2010_toyota_rav4.03.jpg
Toyota has recalled over 8 million vehicles, worldwide, for various defects.

The fine was levied by the DOT's National Highway Traffic Safety Administration, the agency responsible for overseeing auto safety regulations.

Even while agreeing to pay the fine, Toyota denied the government's allegations.

"We believe we made a good faith effort to investigate this condition and develop an appropriate counter-measure," the automaker said in a statement. "We have acknowledged that we could have done a better job of sharing relevant information within our global operations and outside the company, but we did not try to hide a defect to avoid dealing with a safety problem."

Toyota said it agreed to pay the fine to avoid "a protracted dispute and possible litigation" and to allow it to focus on its own quality improvement initiatives.

The Transportation Department's National Highway Traffic Safety Administration said it sought the fine after learning, through documents obtained from Toyota, that the automaker knew of sticky gas pedal problems since at least September of last year.

If not for regulations that capped the fine at $16.4 million, NHTSA would have fined Toyota $13.8 billion, according to a letter the agency sent to the automaker in April.

To arrive at the $13.8 billion figure NHTSA would have counted each vehicle involved in a related recall as a separate violation, as it is allowed to do under federal rules, and fined the carmaker $6,000 for each.

Under federal regulations, automakers are required to inform the agency within five days of determining that a safety defect exists in one of its products.

"By failing to report known safety problems as it is required to do under the law, Toyota put consumers at risk," said Transportation Secretary Ray LaHood in a statement. "I am pleased that Toyota has accepted responsibility for violating its legal obligations to report any defects promptly."

A Transportation official noted that paying the fine does not release Toyota from any potential criminal liability or civil liability related to the defects in question.

The agency said it is still investigating other possible violations by the automaker regarding other, separate defects. While $16.4 million is the maximum fine for a single violation of these rules, other violations could result in other fines.

Toyota also faces numerous civil lawsuits over crashes allegedly caused by "unintended acceleration" in Toyota and Lexus vehicles. A number of those lawsuits were recently combined and will be heard together in a California court.

Toyota cars and trucks have been the subject of at least three separate major recalls in the past year. One, involving 2.3 million vehicles in the United States, was for the "sticky pedal" situation in which gas pedals, as they age, begin to stick in a partially depressed position. Another was for gas pedals that can stick on some floor mats, and a third was for braking problems on Toyota Prius hybrid cars.

The largest fine levied to date by the government on an automaker was nearly $1 million taken from General Motors in 2004 for failing to deal promptly with a windshield-wiper issue, an amount that was negotiated down from the $3 million originally sought by NHTSA.

CNN Wires contributed to this story. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Find Your Next Car
Index Last Change % Change
Dow 16,704.56 243.24 1.48%
Nasdaq 4,456.90 74.05 1.69%
S&P 500 1,953.89 26.78 1.39%
Treasuries 2.28 0.05 2.06%
Data as of 12:04pm ET
Company Price Change % Change
Apple Inc 104.94 1.95 1.89%
Bank of America Corp... 16.66 0.26 1.59%
AT&T Inc 33.67 -0.83 -2.41%
Facebook Inc 79.98 1.61 2.06%
Ford Motor Co 14.38 0.25 1.77%
Data as of 11:50am ET

Sections

Dunkin' Brands reported sluggish sales and warned that growth is going to remain slow. The coffee and breakfast wars are clearly having an impact on Dunkin' and other restaurants. More

Regulators are about to reveal the results of an extensive health check of Europe's top 130 banks, indicating which may need a cash infusion. More

Filmmakers are experimenting with virtual reality technology from companies like Oculus VR to create a new kind of cinematic experience. More

Startups focusing on "ag tech," or agricultural technology, are gaining the attention of farmers and investors More

Concern about the stock market has sent interest rate of 15-year mortgage to lowest level of the year. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.