WASHINGTON (Bloomberg) -- Toyota Motor Corp. today agreed to pay a record $16.4 million U.S. fine for failing to promptly report flaws with vehicle accelerator pedals as it denied breaking safety rules.
The company, which recalled more than 8 million vehicles worldwide for defects that may cause unintended acceleration, is paying the fine to avoid “a protracted dispute and possible litigation,” according to a Toyota statement.
U.S. Transportation Secretary Ray LaHood said the company's settlement showed it was acknowledging its failings.
“I am pleased that Toyota has accepted responsibility for violating its legal obligations to report any defects promptly,” LaHood said in an e-mailed statement. “By failing to report known safety problems as it is required to do under the law, Toyota put consumers at risk.”
Toyota was fined after LaHood said documents showed the company “knowingly hid” defects tied to unintended acceleration for four months, violating rules that require notification in five days.
The fine, which is less than 2 percent of Toyota's projected net income for the year ended March 31, may bolster the case for plaintiffs seeking compensation from the Japanese carmaker.
“The fine is coming on top of costs from increased incentives and vehicle testing,” said Tatsuya Mizuno, director of Mizuno Credit Advisory in Tokyo. “At this point, there's no telling what will come of the lawsuits.”
At least 180 consumer and shareholder lawsuits are seeking class-action status and at least 57 individual suits are claiming injuries or deaths caused by sudden acceleration incidents in Toyota vehicles.
The carmaker could have contested the fine, which is the maximum amount the National Highway Traffic Safety Administration can levy. The company signed the agreement with the U.S. today.
Toyota, in an e-mailed statement today, said it “denies NHTSA's allegation that it violated the Safety Act,” and said “we believe we made a good-faith effort to investigate and develop an appropriate counter-measure.”
Toyota has 30 days to pay, imposed April 5 by NHTSA. It may be followed by additional penalties because the pedals supplied to Toyota by CTS Corp. “had two separate defects that may require two separate remedies,” the agency told the carmaker in a letter the day it announced the civil penalty.
The U.S. continues to investigate Toyota's compliance with defect disclosure rules, LaHood said today.
Toyota executives have testified at three congressional hearings this year, and the company will be the focus May 6 of the House Energy and Commerce Committee, Chairman Henry Waxman said last week. Waxman, a California Democrat, asked Toyota for documents on unintended acceleration for a hearing his panel will hold on potential electronic causes.
A recall in January of 2.3 million vehicles involved pedals from CTS, based in Elkhart, Ind., that were slow to return after being depressed as well as pedals on various vehicles that could become stuck.
Manufacturers have five days to report safety defects to NHTSA. The regulator said Toyota waited at least four months before notifying authorities about the defects.
The carmaker failed to share defect information adequately among regional units, company President Akio Toyoda has said. His grandfather founded the company.
The U.S. fine might have been as much as $13.8 billion were it not for a statute limiting NHTSA to a civil fine to $16.4 million, the agency said in its letter. That's based on each of the 2.3 million vehicles involved in the U.S. recall qualifying for a fine of as much as $6,000 each.