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Business

Sticky pedals land Toyota a 16-million-dollar fine from US govt

Video by FRANCE 24

Text by News Wires

Latest update : 2010-04-06

Japanese auto giant Toyota is facing a fine of 16 million dollars from the United States government over failing to notify authorities of a sticky pedal defect that forced the recall of 2.3 million cars in the US.

AFP - The United States on Monday said it was seeking a 16-million-dollar fine against Japanese auto giant Toyota for its failure to quickly notify authorities about vehicle safety problems.

After poring over 70,000 pages of evidence, the Department of Transportation said it was seeking "the maximum civil penalty of 16.375 million dollars against Toyota" after it failed to report safety defects in a timely manner.

According to the National Highway Traffic Safety Administration, the department's watchdog, Toyota failed to report "the dangerous 'sticky pedal' defect for at least four months, despite knowing of the potential risk to consumers."

It is the largest civil fine against an automaker ever sought by the NHTSA.

Toyota has recalled around 2.3 million cars in the United States for the pedal defect and more than eight million cars worldwide over several problems, including the sticking accelerator pedal which caused cars to speed out of control.

"Auto manufacturers are legally obligated to notify NHTSA within five business days if they determine that a safety defect exists," the department said in a statement.

"We now have proof that Toyota failed to live up to its legal obligations," Transportation Secretary Ray LaHood said in the statement.

"Worse yet, they knowingly hid a dangerous defect for months from US officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws."

The recalls have caused an outcry in the United States, with Toyota executives hauled over the coals by Congress and the company's previously stellar reputation for safety left in tatters.

Toyota insists the problems were caused by mechanical defects including a sticking accelerator pedal, but is facing allegations it is due to an electronic failure.

The NHTSA said Monday's announcement related only to the sticky-pedal issue and said it "is still investigating Toyota to determine if there are additional violations that warrant further penalties."

Toyota has two weeks to agree to pay the fine, or contest it. If the two parties cannot agree a settlement they could go to court.

In a statement Toyota said it had not yet received a letter from the NHTSA, and said it was taking steps to rectify the company failings.

"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.

"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," the automaker said.

In March the US government announced a series of investigations into the causes of "unintended acceleration" in Toyota and other brands of cars, calling in NASA engineers to help.

The Department of Transportation plans to buy cars that are suspected of unintended acceleration and subject them to a battery of tests.

The NHTSA is itself under fire for allegedly failing to adequately review consumer complaints about Toyota and other cars, but it is the beleaguered Japanese carmaker that remains in the spotlight for now.

The sudden acceleration problem has been blamed for more than 50 deaths in the United States, and Toyota faces a slew of legal challenges in US courts.

A San Diego court recently heard arguments from two dozen attorneys across the United States who want to consolidate hundreds of lawsuits into one multibillion-dollar case in a single jurisdiction.

Toyota stock fell on the news, trading down from 81.55 to 80.39 in the minutes after the news broke, before recovering slightly.

In after hours trade the stock was off 0.31 percent.

But Jessica Caldwell, an analyst from Edmunds.com said the news was unlikely to have a deep impact on the share price.

 

Date created : 2010-04-06

  • AUTO INDUSTRY

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