Toyota fined $16 million by US government over recalls

Tuesday, April 6, 2010

US regulators intend to fine Toyota Motor Company $16.4 million over allegations that the company failed to notify government officials in “a timely way” about flaws in its vehicles that led to a major recall earlier this year.

The fine is the maximum penalty allowed under current US law, and would be the largest ever against an automaker, dwarfing a $1 million fine against General Motors in 2004. The U.S. Transportation Department is also considering the possibility of further fines if it was determined that the company had committed other violations of US law. The fine is the result of an investigation opened on February 16 into Toyota’s actions during the recall of 2.3 million vehicles in the US. Toyota now has a period of two weeks in which it can appeal the fine.

Current law requires an automaker to notify the US government within five days if it has determined that a safety issue exists in one of its vehicles. Internal Toyota documents obtained by the government showed that the company was aware of the issues in its cars as early as September 2009, well before it reported the problems to the US government in January.

US Transportation Secretary Ray LaHood said that the government has “proof that Toyota failed to live up to its legal obligations,” and that “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.”

Toyota, in a statement posted on their website, said that “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 statement added, “These include the appointment of a new Chief Quality Officer for North America and a greater role for the region in making safety-related decisions.”