Motoramic

Toyota hit with $17.35 million fine, probation for hiding safety defects — again

Justin Hyde
Motoramic

Two years ago, in front of a congressional committee, Toyota's U.S. sales chief vowed that the Japanese automaker had learned hard lessons from its mishandling of hundreds of complaints about floor mats that could trap accelerator pedals. Toyota, he said, had changed its management and its procedures; recalls would now be overseen by an executive with a direct line to chief executive Akio Toyoda, and it would avoid the mistakes that led to three fines totaling $49 million.

Today, Toyota agreed to pay another $17.35 million fine and go on an unprecedented form of auto safety probation for hiding reports of trapped accelerator pedals from U.S. auto safety regulators. Those officials found earlier this year that owners of 2010 Lexus RX350 sport utility vehicles were suffering the same problem Toyota vowed it had fixed in 2010, spawning another recall in June that was expanded yet again to Toyota Land Cruisers last month, for a total of 164,601 vehicles.

How it happened again remains an unanswered question.

The battle between Toyota and the National Highway Traffic Safety Administration highlights the friction between the industry and federal law, which requires automakers to conduct a safety recall within five business days of discovering a defect. The key word there is "discovering;" automakers often investigate complaints and potential defects for months before declaring them either a minor problem or announcing the sudden epiphany of a safety concern. NHTSA regularly pushes automakers to conduct recalls for problems they contend don't pose a safety threat — as it did in October, when Toyota reversed itself after months of back-and-forth with the agency and recalled 2.3 million vehicles for power window switches that could catch fire.

While federal officials grant automakers leeway to probe problems, they have grown more stringent toward those who attempt to hide data from the agency. Federal law requires automakers turn over all safety-related complaints they receive; according to NHTSA, only after it began asking Toyota about floor mat issues with 2010 Lexus RX SUVs earlier this year did the automaker reveal it had 63 complaints since 2009, including 12 accidents and two injuries.

After NHTSA's questions, Toyota added the 2010 Lexus RX350 and RX450h to the accelerator recall in June, and tacked on the 2008-2011 Toyota Land Cruiser in November. The recall involves dealers installing a new, shorter accelerator pedal in the SUVs that won't get trapped by all-weather floor mats.

"It's critical to the safety of the driving public that manufacturers report safety defects in a timely manner," said NHTSA Administrator David Strickland in a statement. "Every moment of delay has the potential to lead to deaths or injuries on our nation's highways."

In a brief statement, Toyota acknowledged the $17.35 million fine — the maximum allowed under federal law — but denied any wrongdoing. "We agreed to this settlement in order to avoid a time-consuming dispute and to focus fully on our shared commitment with NHTSA to keep drivers safe," said Ray Tanguay, chief quality officer of Toyota North America.

If the maximum wasn't in place, NHTSA would have fined Toyota $6,000 per 154,000 Lexuses it failed to fix in a timely manner, or $954 million. The cap rises next year to $34 million, which would still be a pittance to a global firm like Toyota that will make nearly $10 billion in profit this fiscal year.

Under the unusual agreement with NHTSA, Toyota vowed further changes, including meeting with NHTSA monthly for the next six months to review pedal entrapment and sudden acceleration cases, a probation NHTSA can extend another six months if it sees fit. It's a tough penalty, but fitting for a repeat offender.

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