Toyota to pay record $17.35 million fine for U.S. defect reporting lapse
Former NHTSA official: Agency sending a message
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WASHINGTON -- Toyota Motor Corp. has been ordered to pay a record fine of $17.35 million for failing to report a safety defect to the U.S. government in a timely manner, the U.S. Department of Transportation said.
The fine is a record civil penalty for a single violation by an automaker and the maximum amount the department's National Highway Traffic Safety Administration can assess, government regulators said today.
The June 2012 recall addressed the potential for accelerator pedal entrapment caused by unsecured or incompatible driver's side floor mat in the 2010 Lexus RX 350 and RX 450h crossovers, Toyota said.
"Safety is our highest priority," U.S. Transportation Secretary Ray LaHood said in a statement. "With today's announcement, I expect Toyota to rigorously reinforce its commitment to adhering to United States safety regulations."
The automaker did not admit to any violation of its obligations under the U.S. Safety Act, the company said in a statement.
"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," Ray Tanguay, chief quality officer of Toyota North America, said in the statement.
"Toyota is dedicated to the safety of our customers, and we continue to strengthen our data collection and evaluation process to ensure we are prepared to take swift action to meet customers' needs," Tanguay's statement said.
Toyota has recalled more than 14 million vehicles globally in recent years to fix sticky gas pedals and floor mats.
Allen Kam, a former senior enforcement attorney at NHTSA who was responsible for assessing civil penalties, said it is somewhat unusual for a company to reach a settlement and still pay the maximum penalty. Usually such a deal leads to a smaller fine, showing compromise.
That the agency opted to fine Toyota the full $17.35 million shows that regulators want to send a message to the public and to the industry, he said.
"It speaks to the gravity of the violation. If a company is viewed as having a pattern and practice of delaying recalls, of not conducting timely recalls, then NHTSA will be more inclined to seek a higher penalty," said Kam, who left the agency in 2000 and is now a private consultant in Bethesda, Md.
"To put this in perspective," he added, "Toyota is a very large international corporation. While it's the largest (fine) that NHTSA is allowed to impose by its statute, it's still a rounding error in Toyota's budget."
28 complaints
Regulators have received 28 complaints about vehicle speed control or accelerator pedals in RX350 and RX450 vehicles, a review of a NHTSA database shows.
The first of the reports was filed on Feb. 3, 2010, a few weeks after Toyota first notified regulators that accelerator pedals in other vehicles could become stuck. Toyota met with NHTSA on Jan. 19, 2010 to discuss field reports, and two days later, the company recalled 2.3 million vehicles to fix the potentially "sticky" pedals.
That recall did not include the RX350 or RX450h. At the time NHTSA had not received any complaints about sticky pedals in those two models, but reports filtered in afterwards.
One such report, filed on May 18, 2011, described an incident where a 2010 model RX350 suddenly accelerated to above 60 mph while its passengers were waiting for a security gate to open. The vehicle reportedly crashed through a pair of gates and went airborne over a street before coming to rest against the side of building.
One woman died and two people were injured in the crash, according to the report, dated May 18, 2011. It is the only one of the 28 complaints in NHTSA's database that led to a death or an injury.
Trend noticed
NHTSA said it contacted Toyota about the latest issue in May this year after it noticed a trend in vehicle owner questionnaires.
Toyota advised NHTSA a month later that it was aware of 63 alleged incidents and said it would recall 154,036 Lexus RX 350s as well as 2010 RX 450h vehicles to address the defect.
Federal law requires automakers to notify NHTSA within five business days of determining that a safety defect exists and to conduct a recall.
The maximum fine NHTSA can assess for reporting violations will double to $35 million next year.
Toyota was fined a total of $48.8 million in civil penalties in 2010 as a result of three separate investigations into its handling of auto recalls.
In 2010, the company paid two $16.4 million fines and one $16 million fine, all for reporting violations. NHTSA said at the time that Toyota didn't report problems with sticking gas pedals in a timely manner, nor did it report problems with floor mats trapping gas pedals.
Toyota also told NHTSA that a recall of commercial trucks in Japan for a steering problem did not affect U.S. vehicles. But a year later, the company recalled similar vehicles in the United States.
Reuters, Bloomberg, Gabe Nelson, Philip Nussel and David Phillips contributed to this report.
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