Toyota Should Be Fined $16.4 Million, LaHood Says

Toyota Should Be Fined $16.4 Million, LaHood Says

April 5 (Bloomberg) -- Toyota Motor Corp. “knowingly hid a dangerous defect” that caused sudden acceleration and should be fined $16.4 million, the biggest U.S. penalty imposed on a carmaker, Transportation Secretary Ray LaHood said.

Toyota, the world’s largest automaker, waited at least four months before it told the National Highway Traffic Safety Administration about vehicle accelerator pedals that may stick, LaHood said today in an e-mailed statement.

“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “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 proposed fine is the maximum civil penalty the auto- safety regulator can impose. Toyota, based in Toyota City, Japan, in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals. The company has recalled more than 8 million vehicles worldwide for flaws that may cause unintended acceleration.

NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29, the day it told distributors in 31 European countries and Canada to make repairs to resolve sticky-pedal complaints.

Toyota hadn’t received NHTSA’s letter on the fine, the company North American sales unit said today in an e-mailed statement.

‘Important Steps’

“We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will accept or dispute the penalty.

Toyota has two weeks to agree or contest the fine, Olivia Alair, a Transportation Department spokeswoman, said in an e- mail. If Toyota contests the penalty and a settlement isn’t reached, “it would go to court,” she said.

NHTSA’s largest automaker fine was $1 million against General Motors Corp. in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles.

The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier, who has filed class-action and individual lawsuits related to the claims.

‘Free Publicity’

“Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said today in a phone interview. The fine “is free publicity that counters Toyota.”

Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 individual suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg.

Toyota’s American depositary receipts, each equal to two ordinary shares, rose 77 cents to $81.26 at 4:15 p.m. in New York Stock Exchange composite trading. They have lost 3.4 percent this year compared with the benchmark NYSE Composite Index, which has increased 5.8 percent.

source: bloomberg.com