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Toyota faces $16.4M fine for hiding safety defect

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Toyota faces $16.4M fine for hiding safety defect

Proposed penalty is largest ever sought by NHTSA officials

David Shepardson / Detroit News Washington Bureau

Washington -- Federal safety regulators are seeking to fine Toyota Motor Corp. $16.4 million -- the largest ever penalty against an automaker -- for failing to disclose problems with sticky accelerator pedals in a timely manner.

The National Highway Traffic Safety Administration said Toyota knew in September that it had a problem with accelerator pedals that required fixing, but failed to recall 2.3 million vehicles until January -- four months later.

"We now have proof that Toyota failed to live up to its legal obligations," Transportation Secretary Ray LaHood said Monday. "Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families."

Auto manufacturers are legally obligated to notify NHTSA within five business days if they determine a defect exists. NHTSA said it learned after reviewing Toyota's records that it knew of the pedal defect since at least Sept. 29, 2009.

NHTSA outlined its findings in a five-page letter to Toyota late Monday and gave the company until April 19 to respond in writing. NHTSA said it will go to court to impose the fine if Toyota raises objections.

The $16.375 million penalty is the maximum NHTSA can levy under law. Previously, its largest fine was $1 million against General Motors in 2004 for failing to disclose a defect with windshield wipers in 600,000 vehicles for more than two years. Toyota could face more fines as the agency continues to investigate.

"We will continue to hold Toyota accountable for any additional violations we find in our ongoing investigation," NHTSA Administrator David Strickland said.

The fine against Toyota comes just six weeks after NHTSA launched an investigation into the timeliness and scope of the automaker's three recent recalls. Approximately 2.3 million vehicles were recalled in January for the sticky pedal defect. Toyota has separately recalled 5.4 million vehicles over gas pedal entrapment issues, with some vehicles covered by both actions.

Reviewing Toyota's records, NHTSA learned that the automaker issued repair procedures Sept. 29 to its distributors in 31 European countries and Canada to address complaints of sticky accelerator pedals and sudden acceleration. Documents show Toyota was aware that U.S. consumers were experiencing the same problems, the agency said.

NHTSA obtained hundreds of e-mails from Toyota that support its conclusion Toyota knew of the issue last year.

The agency has received more than 3,000 complaints of runaway Toyota vehicles since 2000, alleging at least 51 deaths.

The penalty is a financial pittance for Toyota, which had revenue of $209 billion last year, but could add to its public relations woes. The company has endured congressional hearings and a torrent of bad publicity over the acceleration problem.

Toyota said it was improving its safety efforts.

"We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters," Toyota said in a statement Monday.

NHTSA, which came under harsh scrutiny for conducting eight investigations into sudden acceleration issues at Toyota since 2000 and doing little, is now taking a far more aggressive stance with automakers.

"Toyota's actions have hurt everyone from consumers to our auto dealers. That is why today's announcement sends an important message to Toyota that failure to disclose safety defects will cost you," said Sen. Amy Klobuchar, D-Minn., a critic of Toyota during congressional hearings.

"To make sure problems like this don't happen again, consumers' complaints need to be given as much attention from safety regulators as the industry's defense of those complaints."

NHTSA has asked its inspector general to determine if it needs more investigators. The agency is no longer automatically closing investigations when automakers agree to a recall.

From The Detroit News: http://www.detnews.com/article/20100406/AUTO01/4060371/1148/auto01/Toyota-faces-$16.4M-fine-for-hiding-safety-defect#ixzz0kK2mQ1MJ

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U.S.: Toyota withheld info, must pay $16.4 million

Regulators told of issues later, officials say



WASHINGTON -- The Obama administration fined Toyota $16.4 million on Monday for delaying by at least four months a recall for accelerator pedals in 2.3 million vehicles that could trigger sudden acceleration -- and safety regulators warned that more fines could be coming.

The fine, the largest ever sought by U.S. auto safety regulators against an automaker over recalls, forces Toyota to either accept a judgment that it illegally hid a safety problem from U.S. customers or fight a high-profile court battle with the National Highway Traffic Safety Administration.

"We now have proof that Toyota failed to live up to its legal obligations," said U.S. Transportation Secretary Ray LaHood. "Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families."

The world's largest automaker declined to say whether it would accept the fine, contest it or seek a reduced settlement.

It has two weeks to reply.

The $16.4-million fine is the largest NHTSA can levy against an automaker in one probe. The agency has two other probes under way into Toyota's handling of a floor mat recall and thousands of sudden acceleration complaints.

"I am glad the government is finally doing something about this," said Lilia Alberto, whose mother died in April 2008 when her 2005 Toyota Camry allegedly accelerated from 25 to 80 m.p.h. on a street near her Flint home, eventually hitting two trees. "This gives a heads up to anybody who believed that Toyotas were perfect."

Toyota knew

The U.S. government said hat Toyota knew enough about sticking pedal complaints worldwide to tell dealers in 31 European countries and Canada how to tackle complaints Sept. 29, but didn't alert U.S. regulators.

The disclosure adds to evidence that Toyota downplayed or withheld for years information about vehicle defects from NHTSA and American consumers, decisions that could haunt the automaker as it fights thousands of lawsuits over sudden acceleration.

In January, the automaker told NHTSA about the problem and issued a recall for 2.3 million vehicles, following prodding by NHTSA. At the time, Toyota revealed that the first complaints of sticking pedals had been heard from customers as far back as 2007. It had changed the materials used to build the pedals in production twice -- once in February 2008, and again in August of last year for European models -- without issuing a recall in the U.S.

But the January letter to NHTSA did not reveal the September bulletin to dealers outside the U.S., which told dealers how to fix the pedals and address complaints of engine surging and sudden acceleration.

Under federal law, automakers have five days to report a safety defect to the U.S. government once it's discovered. Automakers are also required to disclose recalls outside the U.S., but the Toyota advisory stopped short of calling back vehicles for repairs.

Toyota has two weeks to decide whether to accept the fine. In a statement, the automaker did not say what it would do next, but touted the steps it's taken to tackle quality problems after the recall.

"While we have not yet received their letter, we understand that NHTSA has taken a position on this recall," the automaker said.

The administration said it would consider assessing other fines against Toyota if it found evidence that the Japanese automaker withheld more information about defects. In total, Toyota has recalled 5.6 million vehicles in the U.S. to fix two problems that it says can cause sudden acceleration, and NHTSA is probing whether any other defects could account for thousands of complaints about Toyota and Lexus models.

In February, NHTSA opened three investigations into Toyota's handling of its recalls and complaints of sudden acceleration. In theory, the agency could fine Toyota as much as $49 million if it found the company withheld information in all three cases. Before Monday, the largest fine NHTSA had ever levied over a recall was $1 million against General Motors in 2004 over faulty windshield wipers in 600,000 vehicles.

"Safety is our top priority, and we will vigorously pursue companies that put consumers at risk," said NHTSA Administrator David Strickland. "We will continue to hold Toyota accountable for any additional violations we find."

Two months ago, Toyota estimated that it would earn about $840 million for the fiscal year that ended March 31, on revenues of $195 billion.

NHTSA said Toyota had provided 70,000 pages of documents as part of the government's probe.

During a U.S. Senate hearing last month, lawmakers revealed internal Toyota documents showing its U.S. managers asking for more power to handle defect and recall issues as far back as 2006.



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