Toyota Agrees to Pay $16.4 Million Fine

TM agrees to pay US government $16.4 million fine
TM agrees to pay US government $16.4 million fine

It was perhaps a no-brainer that Toyota Motor (TM) agreed to pay the federal government's record $16.4 million fine for failing to disclose sooner that it knew there were problems with gas pedals in some of its vehicles. Faced with billions of dollars in losses related to numerous safety-recall campaigns, the civil penalty -- the maximum imposable -- by comparison is a pittance.

The National Highway Traffic Safety Administration imposed the fine earlier this month for knowingly hiding "a dangerous defect for months from U.S. officials" and putting American drivers and their families at risk. Federal law requires that car makers report defects within five days of discovery. Toyota took more than four months to issue the Jan. 21 recall of 2.3 million vehicles for "sticky" gas pedals, which may be the cause of unintended acceleration in some cars.

The government had given Toyota until Monday to respond to the complaint. The company is expected to pay the fine within 30 days to avoid going to court against the government, officials from the Transportation Department said.

"When you look at the toll it's taken on Toyota's reputation, when you look at the number of vehicles involved, when you look at the hardship it's placed on Toyota's customer base, it's only right for Toyota to take this fine," Dennis Virag, president of Automotive Consulting Group based in Ann Arbor, Mich., told the Associated Press.

Toyota said in a statement Monday that while it agreed to pay the fine in part "to avoid a protracted dispute and possible litigation," it denied any wrongdoing. And in what appeared to be a swipe at Obama administration officials, the auto maker said that it regretted NHTSA's decision to seek the civil penalty.

"We believe we made a good faith effort to investigate this condition and develop an appropriate counter-measure," the company explained. Further, Toyota said that while executives could have done a better job of sharing information, both within and outside the company, "We did not try to hide a defect to avoid dealing with a safety problem."

That statement directly contradicts the revelation earlier this month that Toyota executives knew more than they let on about the problems involving unintended acceleration. Documents turned over to the federal government showed that Toyota's former chief U.S. public relations executive, Irv Miller, warned in an email to colleagues that the auto maker needed to "come clean" about problems involving "sticky" accelerators. By keeping quiet, Miller urged, Toyota "was not protecting our customers."

In public statements and in testimony before Congress, executives from the world's largest automaker have repeatedly apologized in past months for failing to live up to customers' expectations for safety and quality. Toyota still faces dozens of personal injury and wrongful death lawsuits in federal courts, as well as investigations by federal prosecutors and the Securities and Exchange Commission.

The company has recalled more than 8 million vehicles for items related to unintended acceleration and braking problems, which have included its top-selling Camry, Corolla and Prius models. On Friday, in a sign that perhaps its quality problems remain ongoing, Toyota recalled some 600,000 Sienna minivans to fix potential rusting spare tire cables that could break and create a road hazard.

Despite the bevy of recalls, Toyota has managed to counter any negative drag on sales last month with generous incentives that included zero-interest loans and cheap leases, programs Toyota earlier this month committed to keeping in place during April.

Other manufacturers, including Ford Motor (F), General Motors and Honda Motor (HMC), have matched many of the incentives. Those, along with an improved economy, helped push auto sales higher in March. Both Ford and Toyota reported sales increases of at least 40%, compared to a year ago.