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Toyota agrees to pay $32.4 million U.S. fine over timing of recalls

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Toyota agrees to pay $32.4 million U.S. fine over timing of recalls

Neil Roland

Automotive News -- December 20, 2010 - 10:26 pm ET

WASHINGTON -- Toyota Motor Corp. agreed today to pay two more safety fines for a total of $32.4 million, the maximum allowable under U.S. law, to settle federal investigations of whether the company notified regulators of safety defects in timely fashion.

The fines, in addition to an earlier $16.4 million levy paid to settle a similar probe, brings to $48.8 million the amount that Toyota has agreed to pay in civil penalties this year.

Each of the three fines was the maximum permitted under federal law at the time the alleged violations occurred. Together they dwarf safety penalties paid by any other automaker over the years.

One investigation settled today involved 2004-2005 recalls of light trucks for alleged loss of steering control. The other involved a 2007 floor-mat recall to address unintended acceleration caused by pedal entrapment.

Under the settlements, Toyota did not admit to any violation of its federal safety obligations.

"Toyota is pleased to have resolved these legacy issues related to the timeliness of prior recalls dating back to 2005," Steve St. Angelo, Toyota's Chief Quality Officer for North America, said in a statement. "As we have demonstrated in recent months, our North American operations now have a greater voice in making safety decisions, and we are taking appropriate action whenever any issues emerge."

Other investigations

Toyota is still subject to additional fines and investigations by the National Highway Traffic Safety Administration.

The company could face another possible fine in a probe of whether it viewed unintended acceleration defects too narrowly in four recalls between 2007 and January 2010, said a NHTSA official who declined to be identified.

That investigation, begun in February, is looking in part at how Toyota considered electronic interference as a possible cause of sudden acceleration, the NHTSA Web site says.

The probe is also addressing whether Toyota should have recalled additional models with electronic throttle control, according to the Web site.

Toyota has said that all cases of unintended acceleration stem from either floor mat entrapment or sticky gas pedals. Its tests have ruled out electronic interference as a possible cause, the company said.

Since November 2009, Toyota has recalled 15.5 million vehicles worldwide, most for unintended acceleration.

"I am pleased that Toyota agreed to pay the maximum possible penalty and I expect Toyota to work cooperatively in the future to ensure consumer safety," Transportation Secretary Ray LaHood said in a statement.

The biggest previous fine, before Toyota's three penalties for more than $16 million apiece, was a $1 million fine paid by General Motors for windshield-wiper failure in vehicles made in 2002-2003.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101220/OEM/101229982/1290#ixzz18kk9SN00

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Late safety recalls cost Toyota record fines

Automaker agrees to pay $32.4M to settle two probes

David Shepardson / Detroit News Washington Bureau

Washington— Toyota Motor Corp. agreed Monday to pay $32.4 million in federal fines, settling two federal investigations that found the automaker delayed recalling nearly 6 million vehicles.

Toyota's board of directors agreed to pay the maximum fine in two separate investigations by the National Highway Traffic Safety Administration.

Toyota will pay $16.4 million after NHTSA said the Japanese automaker delayed its recall of nearly 5 million vehicles for pedal entrapment and will pay $16 million after the agency said it delayed a 2005 recall of 980,000 million 4Runners and pickups for faulty steering rods that could lead to loss of steering control.

Toyota didn't admit to any wrongdoing in paying the record fines. "These agreements are an opportunity to turn the page to an even more constructive relationship with NHTSA," said Steve St. Angelo, Toyota's chief quality officer for North America.

The settlements concern the timeliness of recalls conducted by the company in 2005 to fix steering relay rods and to assess pedals that may have become trapped by floor mats from 2007 to early 2010, Toyota said in a statement.

The agreement means Toyota has agreed to pay nearly $49 million in fines this year, by far the most ever paid by a carmaker in U.S. history for delaying recalls, following its recall of more than 8 million vehicles from 2009-10 for sudden acceleration issues worldwide.

The two fines follow Toyota's decision in April to pay $16.4 million for delaying its recall of 2.3 million vehicles for sticky pedals by at least four months. That recall in January forced Toyota to temporarily stop selling most of its vehicles and sparked an image crisis for Toyota, the world's largest automaker.

"This is hugely significant," said Sean Kane, president of Safety Research & Strategies, an auto safety advocacy firm. "No manufacturer has ever faced something like this in industry history.

It speaks volumes to where Toyota stands."

Since 2000, NHTSA has received more than 3,000 complaints and reports of 93 deaths linked to sudden acceleration in Toyota vehicles. The episode badly damaged the company's once-sterling reputation for quality.

Toyota still faces hundreds of civil lawsuits and a criminal investigation by a federal grand jury in New York into its handling of several recalls.

"I expect Toyota to work cooperatively in the future to ensure consumers' safety," Transportation Secretary Ray LaHood said.

Toyota didn't admit to any wrongdoing in paying the record fines and wouldn't answer any questions.

Toyota's handling of the pedal entrapment case drew harsh criticism during hearings in Congress.

Initially, Toyota agreed to recall just 55,000 all-weather floor mats in September 2007. Internal documents first obtained by The Detroit News show the company repeatedly bragged about saving more than $100 million by not conducting a more expensive recall.

It wasn't until a August 2009 fatal crash in Santee, Calif., that Toyota agreed to a more comprehensive fix to pedal entrapment problems. NHTSA said the crash was the result of pedal entrapment in a loaner Lexus that killed an off-duty California Highway Patrol officer, two small children and his wife. It flew off an embankment and burst into flames.

Mark Saylor and his wife, Cleofe, both 45; their 13-year-old daughter, Mahala; and 38-year-old brother-in-law, Chris Lastrella, were killed after reporting to a 911 operator that they could not stop their Lexus ES 350. The 911 call features the voice of Lastrella, telling the operator that the vehicle had no brakes. The call ended with occupants calling on each other to pray.

The second fine resulted when Toyota recalled Hilux trucks in Japan with steering relay rods prone to fatigue cracking and breaking.

Toyota has recalled more than 7 million vehicles this year in 18 separate campaigns, both records for Toyota.

By settling, Toyota avoided some of the government's harsh rhetoric in April, when LaHood said Toyota "knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families."

In 2004, General Motors Co. paid the largest fine to date, $1 million, to settle charges that it failed to conduct a timely recall.

The problem involved windshield wiper failure in 581,344 vehicles.

In 1994, the Clinton administration said GM had knowingly sold trucks that posed a hazard because of engine fires. Rather than order a recall, the Transportation Department announced that GM agreed to pay $51 million toward auto safety research programs.

From The Detroit News: http://detnews.com/article/20101221/AUTO01/12210356/Late-safety-recalls-cost-Toyota-record-fines#ixzz18kmMDYHW

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Toyota pays $32M more for lapses

Record new fines follow probe into recalls

By KEN THOMAS

Associated Press

WASHINGTON -- Toyota has agreed to pay the government a record $32.4 million in additional fines to settle an investigation into its handling of two recalls at the heart of its safety crisis.

The Transportation Department said late Monday that the civil penalties will settle investigations into how Toyota dealt with recalls over accelerator pedals that could get trapped in floor mats, and steering relay rods that could break and lead to drivers losing control.

"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," said Transportation Secretary Ray LaHood.

The latest settlement, on top of a $16.4-million fine Toyota paid in a related investigation, brings the total penalties levied on the company to $48.8 million. It caps a difficult year for the world's No. 1 automaker, which has recalled more than 11 million vehicles globally since the fall of 2009 and scrambled to protect its reputation for safety.

Toyota's board of directors agreed today to pay the fines at the company's board meeting in Japan, and the company said it agreed to the penalties without admitting to any violations of U.S. laws. However, that does not free Toyota from potential civil and criminal penalties in private lawsuits and other federal investigations.

Steve St. Angelo, Toyota's chief quality officer for North America, said in a statement that the company has "worked very hard over the past year to put these issues behind us and set a new standard of responsiveness to our customers."

In April, Toyota agreed to pay the maximum fine allowed under law for a single case -- $16.4 million -- for failing to promptly alert U.S. regulators to safety problems over sticking accelerator pedals. Under federal law, automakers must notify the National Highway Traffic Safety Administration within five days of determining that a safety defect exists and promptly conduct a recall.

The latest fines involve two separate safety problems. The first case deals with recalls in 2009 and 2010 of about 5 million Toyota and Lexus vehicles with gas pedals that could become entrapped in floor mats.

The second involves Hilux trucks with steering relay rods that could break and affect steering. Toyota told U.S. regulators in 2004 that the problem was limited to vehicles in Japan. But a year later, it said the steering defect was also found in several U.S. models and recalled nearly 1 million vehicles.

Read more: Toyota pays $32M more for lapses | freep.com | Detroit Free Press http://www.freep.com/article/20101221/BUSINESS01/12210420/Toyota-pays-32M-more-for-lapses#ixzz18kpUZuJU

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TOYOTA TO PAY RECORD $32 MILLION FINE OVER RECALLS

By Andrew Ganz

Toyota’s massive 2010 recalls haven’t just hurt the automaker’s reputation. They’ve also hurt its bottom line – to the tune of an additional $32.425 million fine payable to the National Highway Traffic Safety Administration.

Toyota agreed to pay the fine – the maximum allowed by NHTSA – but didn’t admit that it violated any laws.

“I am pleased that Toyota agreed to pay the maximum possible penalty and I expect Toyota to work cooperatively in the future to ensure consumer safety,” Transportation Secretary Ray LaHood said in a statement released by the United States government.

The fines are the result of two separate investigations over Toyota’s response to acceleration and steering issues.

Toyota will pay $16.375 million because NHTSA says it delayed notifying the government that its accelerator pedals could become wedged under floor mats, causing vehicle control issues. The additional $16.050 million was levied on Toyota because NHTSA says that it delayed by several years an unrelated recall over defective steering rods.

Earlier this year, Toyota was dinged for $16.4 million for delaying the recall of faulty gas pedals that could become stuck under hard

acceleration.

Toyota has not said when it will be making the payment to NHTSA. Prior to this year’s massive recall fines, the largest penalty ever levied against an automaker was $1 million charged to General Motors over a windshield wiper recall in 2004.

link:

http://www.leftlanenews.com/toyota-to-pay-record-32-million-fine-over-recalls.html

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Report: Toyota agrees to extra $32.4M in fines over recalls

by Zach Bowman (RSS feed) on Dec 21st 2010 at 10:29AM

It looks like Toyota isn't finished shelling out cold, hard cash for its transgressions in handling its recalls. According to the Associated Press, the automaker has agreed to pay another $32.4 million in civil penalties. The money will effectively settle an inquiry into how Toyota handled recalls associated with both sticking accelerator pedals and faulty steering rods. The new penalty is stacked on top of the already record-setting $16.4 million that Toyota paid earlier this year, and brings the grand total up to a hefty $48.8 million. Even with that steep price tag, AP says that by agreeing to pay the fines, Toyota isn't admitting to any wrongdoing.

The federal government contends that Toyota failed to notify officials in a timely manner when the automaker discovered potential safety defects. Meanwhile, Toyota seems to be willing to do whatever it takes to put the safety fiasco behind it so that the company can move forward.

link:

http://www.autoblog.com/2010/12/21/report-toyota-agrees-to-extra-32-4m-in-fines-over-recalls/

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Toyota Pays Another Record Fine For Late Recalls

Japanese maker settles probe – at cost of $32.4 million.

by Paul A. Eisenstein on Dec.21, 2010

Toyota pays a record $32.4 million in fines to settle two federal probes of delayed recalls.

Toyota has agreed to pay a record $32.4 million in fines levied by federal regulators for admittedly delaying the recall of six million potentially unsafe vehicles.

The settlement of the two separate probes by the National Highway Traffic Safety Administration caps a disastrous year for a Japanese automaker once reputed to build some of the safest and most reliable vehicles on the road. Since Toyota announced the first of two major efforts to resolve a so-called unintended acceleration problem, in late 2009, it has since recalled more than 11 million vehicles worldwide, most in the U.S.

Toyota paid a previous $16.4 million fine, last April, for delaying the second of the two unintended acceleration recalls after learning about potentially sticky accelerator pedals. At the time, that was the largest fine ever levied by the NHTSA.

The latest move involves payment of another $16.4 million for delaying the October 2009 recall for pedal entrapment – which can occur when loose carpets or floor mats trap the gas pedal and make it difficult to slow down. The maker agreed to take action only after a widely-publicized crash that killed a California police officer and three members of his family. Toyota has also agreed to pay $16 million for delaying the 2005 recall of 4Runner SUVs with defective steering rods that could lead to a loss of control.

Paying the $32.4 million in fines reflects Toyota CEO Akio Toyoda's promise to cooperate with U.S. regulators.

Officially, Toyota is not admitting guilt with the payment of the two new fines, and the company is attempting to put a positive, year-end spin on the moves, Steve St. Angelo, Toyota’s North American safety czar insisting, “These agreements are an opportunity to turn the page to an even more constructive relationship with NHTSA.”

St. Angelo’s post was created, earlier this year, after a bitterly confrontational series of hearings, on Capitol Hill, during which lawmakers grilled senior executives including Toyota CEO Akio Toyoda. The grandson of the company founder promised to both improve relations with U.S. regulators and take steps to overcome Toyota’s worsening quality and safety issues.

Until the unintended acceleration issue captured the nation’s attention, in mid-2009, Toyota enjoyed what analysts like Joe Phillippi, of AutoTrends Consulting, described as a reputation for building “bulletproof” products.

But that image has been sorely tarnished over the last 15 months – despite evidence emerging in a federal probe of the unintended acceleration problem that at least some of the blame goes to driver error.

The problem, for Toyota, is that its safety problems have extended far beyond just runaway cars. Just this month, the maker has announced the recall of nearly 100,000 Sienna minivans due to brake problems that could cause the loss of braking performance. There have also been recalls for defective brakes on the newest Prius hybrid, as well as overheating of older versions of the Prius, a Toyota “halo” car; extensive corrosion of minivans and pickups that could cause parts, such as spare tires, to fall onto the highway; stalling problems with the Corolla and Vibe models; steering issues and a variety of other safety-related problems.

How American motorists are responding to Toyota’s sudden safety shock is unclear. Some recent studies suggest the maker has gotten through the worst in turns of public perception. But sales data is less upbeat. For October and November, Toyota was the only major automotive brand to suffer a sales decline at a time when the overall industry was reporting its strongest performance in several years.

Earlier this year, Toyota Senior Vice President Don Esmond told TheDetroitBureau.com that he expects the company’s existing customers to remain loyal to the brand, but that it will become “more difficult to conquest,” or win over buyers from the competition.

Conquest sales were a major factor in Toyota surging to the number two spot in the U.S. market. In recent months, however, as its momentum has slowed, Toyota has again slipped behind Ford but remains the third-best-selling manufacturer in the country.

Whether the decision to pay the new record fines will actually help Toyota begin the process of repairing its reputation remains to be seen. But the maker hopes it will smooth ruffled feathers in Washington. In recent years, government regulators had tried to take a more cooperative approach with the industry, but Toyota bragged about taking advantage of that relationship.

Prior to last February’s Capitol Hill hearings internal documents leaked out showing the maker crowing about a 2007 recall for loose floor mats. By convincing NHTSA not to order a larger recall, Toyota officials bragged, they saved $100 million.

“I expect Toyota to work cooperatively in the future to ensure consumers’ safety,” says Ray LaHood, Secretary of the U.S. Department of Transportation.

The new $32.4 million fines may be a record for the auto industry, but they’re miniscule compared to the estimates of what just the unintended acceleration issue could ultimately cost Toyota – more than $2 billion according to one forecast by Deutsche Bank.

There are hundreds of lawsuits now working their ways through the courts, including a massive class action in progress in California. Meanwhile, the automaker is under the microscope as a federal grand jury in New York looks at possible criminal charges stemming from delayed recalls.

link:

http://www.thedetroitbureau.com/2010/12/toyota-pays-another-record-fine-for-late-recalls/

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Toyota, NHTSA settle probes

Automaker must pay $32.4M in fines; fed charges still possible

David Shepardson / Detroit News Washington Bureau

Washington— Toyota Motor Corp. and federal regulators agreed to settle two safety investigations for $32.4 million to avoid a lengthy dispute and a possible court fight.

The Japanese automaker agreed to pay the fines by Jan. 19, under the terms of two settlement agreements released Tuesday by the National Highway Traffic Safety Administration.

"It is the mutual desire of NHTSA and Toyota to administratively resolve the civil penalties," according to the agreements. The deals are a "binding agreement in order to avoid a protracted dispute and possible litigation."

But the agreements do not bar the U.S. Justice Department from bringing criminal charges against Toyota. A federal grand jury in New York is probing Toyota's handling of several recalls.

The deal also doesn't bar the Securities and Exchange Commission, which is conducting its own Toyota investigation, from seeking civil penalties.

Toyota's board of directors, meeting in Japan on Tuesday, agreed to pay the maximum fines in two recall investigations by NHTSA.

The agreements say the fines must be paid by Jan. 19 The agency said it believed Toyota delayed the 2005 recall of 980,000 vehicles for faulty steering rods, and the recall of 5.5 million vehicles in 2009-10 for accelerator pedal entrapment issues.

Earlier this year, Toyota paid $16.4 million in civil penalties for delaying its recall of 2.3 million vehicles for sticky gas pedals by at least four months.

In total, Toyota will have paid nearly $49 million in fines by January to resolve the three recall investigations.

Toyota said Monday the agreements "are an opportunity to turn the page to an even more constructive relationship with NHTSA."

From The Detroit News: http://detnews.com/article/20101222/AUTO01/12220352/Toyota--NHTSA-settle-probes#ixzz18qZKHZGw

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