Toyota May Face Second Big Fine from NHTSA

Toyota May Face Second $16.4 Million Fine from NHTSA
Toyota May Face Second $16.4 Million Fine from NHTSA

The National Highway Traffic Safety Administration says Toyota would have been fined as much as $13.8 billion for its delays in telling the public about problems with its cars' accelerators, if federal law didn't cap the amount the agency can levy against a car company, according to Reuters. That's a shame -- the U.S. government could use the money.

Toyota (TM) already faces a $16.4 million penalty -- the maximum allowed -- because it allegedly delayed reporting acceleration problems that eventually led to a 2.3 million-vehicle recall in January. The NHTSA claims that Toyota knew about the defect at least four months before it made the information public. U.S. law requires car companies to initiate recalls within five days of discovering a problem.

But the accelerator systems had two defects, says the agency, which reviewed Toyota documents, and that means the government can levy a second fine. The agency mentioned the possibility of doing just that in its letter to Toyota about the first fine, which was sent on April 5. "The gravity of Toyota's apparent violations is severe and potentially life-threatening," the safety agency's chief counsel, O. Kevin Vincent, wrote in the letter, which was obtained by The New York Times.

Another $16.4 million fine against Toyota wouldn't be a financial burden on the giant automaker. The more important question is whether Toyota's image in the U.S. will be damaged by the additional governmental censure. So far, the company has been able to recover most of its lost market share. After falling as low as 12.3% of U.S. car sales in February, Toyota rebounded to a 16.4% market share in March. Experts say that the improvement was driven by the aggressive incentives the automaker offered to buyers, but it's unlikely that discounts alone would have been sufficient to get customers back into showrooms if they feared for their safety behind the wheel of a Toyota.

Clearly, a significant fraction of consumers must believe that if there are any more problems to be discovered in Toyota vehicles, they won't be dangerous enough to cause accidents. The power of Toyota's brand in the U.S. apparently hasn't been eroded by much. So far.