Toyota Fined Record $17.4 Million for Not Reporting Flaws

Toyota Motor Corp. (7203), the company that has paid the most in fines to the U.S. auto-safety regulator, agreed to pay a $17.4 million civil penalty for delaying reports of a vehicle defect.

The new fine stems from a June recall for Lexus RX 350s and RX 450h vehicles where the accelerator pedal could catch on the driver’s side floor mat, causing it to stick and accelerate when the driver didn’t intend to. It’s Toyota’s second penalty since 2010 for delayed reporting of defects.

“It’s critical to the safety of the driving public that manufacturers report safety defects in a timely manner,” U.S. National Highway Traffic Safety Administrator David Strickland said yesterday in an e-mailed statement. “Every moment of delay has the potential to lead to deaths or injuries on our nation’s highways.”

The fine is a record civil penalty for a single violation and the maximum amount the agency can assess, the NHTSA said in the statement. It adds to scrutiny of the automaker by the agency for defects that can cause unintended acceleration.

“The government’s clearly setting an example of Toyota,” Michelle Krebs, an analyst with automotive researcher, said in a telephone interview. “There is a need to take action when they start getting reports” from consumers of problems with their vehicles.

Toyota, based in Toyota City, Japan, rose 2 percent to 3,795 yen as of 9:44 a.m. in Tokyo trading. The benchmark Nikkei 225 Stock Average advanced 1.4 percent.

The automaker paid NHTSA $48.8 million in 2010 for three investigations stemming from delays in reporting defects that could cause unintended acceleration.

Toyota said in a statement it agreed to the penalty “without admitting to any violation of its obligations under the U.S. Safety Act.”

Pedal Entrapment

“We agreed to this settlement in order to avoid a time- consuming dispute and to focus fully on our shared commitment with NHTSA to keep drivers safe,” Ray Tanguay, chief quality officer of Toyota North America, said in the statement.

Automakers are required to notify NHTSA of safety defects within five business days of determining one exists or that a vehicle doesn’t comply with U.S. vehicle safety standards.

NHTSA said it noticed a trend in early 2012 in pedal entrapment by floor mats in the Lexus sport-utility vehicles. In May, the NHTSA contacted Toyota about the trend and learned in June that the company knew of 63 alleged incidents of possible floor mat pedal entrapment in those SUVs since 2009. By the time the recall was announced June 29, NHTSA said it knew of 97 reports of pedal entrapment in the SUVs.

‘Poster Child’

“The government is making clear that they’re serious and slapping them hard on the wrist again because they didn’t move fast enough on this one,” Krebs said. “The government is really putting the hammer down and using Toyota as the poster child.”

In June, Toyota recalled 154,036 of the vehicles in the U.S. for possible floor-mat interference with pedals. In 2009 and 2010, Toyota recalled more than 10 million cars and trucks worldwide for pedals that could stick and cause unintended acceleration and floor mats that could trap accelerator pedals.

Toyota, as part of the settlement announced yesterday, agreed to make internal changes to quality assurance and review of safety in the U.S., NHTSA said.

“With today’s announcement, I expect Toyota to rigorously reinforce its commitment to adhering to United States safety regulations,” U.S. Transportation Secretary Ray LaHood said in the statement.

To contact the reporter on this story: Angela Greiling Keane in Washington at

To contact the editor responsible for this story: Bernard Kohn at

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