Toyota Motor (TM), one of the world's largest automobile manufacturers, has agreed to pay a record $16.4 million fine for failing to notify U.S. authorities about problems with accelerator pedals in a variety of different makes and models.
The penalty was related to the January recall of 2.3 million vehicles that had sticking accelerator pedals. The acknowledgement of the accelerator malfunctions came only months after the car maker had initiated its largest recall, aimed at fixing defective floor mats that were hindering the gas pedal. In just over half a year, Toyota has issued global recalls on 10.5 million vehicles.
Although this is the largest-ever penalty paid by an auto maker to the U.S. government, the fine itself is relatively minor for Toyota, given the company’s strong balance sheet. That said, the regulatory decision to levy the penalty may carry considerable weight when drivers think reputation. Regulators are claiming that the Japanese company had been aware of the accelerator defects for at least four months prior to notifying the National Highway Traffic Safety Administration, when, by law, the maximum delay is five days.
Toyota claims that it did not violate the law, but agreed to the penalty nonetheless to avoid possible prolonged litigation. And, while asserting it never tried to hide the defect, management did concede it could have done a better job of sharing relevant information.
The fine does not clear Toyota from other potential civil and criminal penalties. In fact, the auto maker currently faces dozens of personal injury and wrongful death lawsuits as a result of malfunction-related accidents.