Toyota to pay $32.4 million fine for recalls

Staff


NEW YORK (CNNMoney.com) -- Toyota Motor Corp., the Japanese automaker that suffered a series of high-profile recalls, will pay $32.4 million in civil penalties, the U.S. Department of Transportation said Monday.

The penalty is the maximum allowed by law.

The fine wraps together two different instances. Toyota was fined $16.375 million for how it handled the recall of nearly five million vehicles with accelerator pedals that could become trapped by floor mats.

The company was also fined $16.05 million for improperly notifying the National Highway Traffic Safety Administration about a safety defect that could result in the loss of steering.

In April, Toyota agreed to pay the maximum penalty of $16.375 million for a third instance involving the so-called sticky pedals. In that case, the Transportation Department asserted that Toyota failed to notify the safety agency within five days of learning of the defect.

The fines announced Monday bring the total civil penalties assessed on Toyota in 2010 to $48.8 million.

"Safety is our top priority and we take our responsibility to protect consumers seriously," said Transportation Secretary Ray LaHood. "I am pleased that Toyota agreed to pay the maximum possible penalty and I expect Toyota to work cooperatively in the future to ensure consumers' safety."

Probe began last winter

In February, NHTSA launched an investigation to determine when Toyota first learned of the pedal entrapment defect.

The safety agency says that Toyota didn't fulfill its obligation to report a known safety defect within five days, the timeframe required by law.

The agency also investigated Toyota's handling of a defect that could result in the loss of steering.

In 2004, Toyota conducted a recall in Japan for Hilux trucks with steering rods prone to cracking and breaking. At that time, Toyota told the U.S. safety agency that a recall wasn't necessary in the United States because the defect was isolated to vehicles in Japan and that it had not gotten similar complaints in the United States.

But a year later, Toyota informed NHTSA that the steering relay rod defect was present in several models sold in the United States and conducted a recall for nearly one million vehicles.

Then, in May 2010, the safety agency received additional information, including complaints from consumers, that Toyota had not disclosed when it said that a U.S. recall was unnecessary.

"Automakers are required to report any safety defects to NHTSA swiftly, and we expect them to do so," said David Strickland, the agency's administrator. "NHTSA acknowledges Toyota's efforts to make improvements to its safety culture, and our agency will continue to hold all automakers accountable for defects to protect consumers' safety."

Steve St. Angelo, Toyota's chief quality officer for North America, indicated that the company was eager to put this troubling chapter behind it.

"These agreements are an opportunity to turn the page to an even more constructive relationship with NHTSA and focus even more on listening to our customers and meeting their high expectations for safe and reliable vehicles."

The automaker still faces civil lawsuits over alleged unintended acceleration in some of its vehicles.

Toyota's decision to pay the NHTSA fines is a significant step in getting past what has been a difficult period, said Jake Fisher, a senior automotive engineer for Consumer Reports magazine.

"I think they're going to bounce back from this," Fisher said. "People have short memories."

A dragged out fight over the fines would have only kept the recalls in the media spotlight, Fisher said, ultimately costing Toyota more in damaged reputation and lost sales.

Toyota's market share has suffered this year, but seems to be on track toward a gradual rebound, said J.D. Power analyst Jeff Schuster.

During 2009, Toyota Motor Co., including Scion and Lexus, accounted for about about 17% of all passenger vehicle sales in America.

"This year, we expect that to be about 15%," he said.

Still, that's up from February's low of point of a little less than 13%, Schuster said.

There's more going on than just recalls to account for Toyota's slip, he said. At the same time that Toyota's public image took a hit, competitors like Ford Motor Co. and Hyundai Motor earned points with improved products. Ford also benefited from a crisis in the domestic auto industry that caused more consumers to want to "buy American," Schuster said.

"All of this happening at the same time opened consumers up to other options," he said.

That's another reason that Toyota will have to work harder, not just get past this crisis, but to repair the damage, said Fisher.

"I do expect they're going to redouble their efforts on these types of quality issues," he said. To top of page

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