8:11am

Tue December 21, 2010
Business

Toyota To Pay $32 Million Fine In Safety Probes

Toyota Motor Corp. has agreed to pay the U.S. government more than $32 million in new fines to settle an investigation into its handling of two big safety recalls.

The civil penalties, coming on top of earlier fines in a related probe, mean the world's biggest automaker is paying a total of $48.8 million to resolve investigations into unintended acceleration because of floor mats that can jam gas pedals and steering rods that could break. Toyota says it has found no link to electronic problems.

The settlement announced Tuesday caps a difficult year for Toyota, which recalled more than 11 million vehicles globally since the fall of 2009 as it scrambled to protect its reputation for safety and reliability. Toyota isn't admitting any violation off U.S. laws, but it could still be vulnerable to civil and criminal court actions and further federal investigations.

As large as the fines are, they're still small compared with the size of Toyota's operations.  Analysts said they would have virtually no impact on the company's earnings: $1.2 billion in the first half of the year alone.

Steve St. Angelo, Toyota's chief quality officer for North America, said in a statement that the company has "worked very hard over the past year to put these issues behind us and set a new standard of responsiveness to our customers. These agreements are an opportunity to turn the page to an even more constructive relationship with NHTSA [National Highway Traffic Safety Administration]."

He said Toyota was grateful to its customers for "their confidence in the quality and reliability of our vehicles."

In April, Toyota agreed to pay the maximum fine allowed under law for a single case -- $16.4 million -- for failing to promptly alert U.S. regulators to safety problems over sticking accelerator pedals. Under federal law, automakers must notify the National Highway Traffic Safety Administration within five days of determining that a safety defect exists and promptly conduct a recall.

At the time, Toyota denied attempting to hide a safety defect and said it agreed to the penalty to avoid a lengthy legal battle with the government.

Jesse Toprak, vice president of industry trends and insight at TrueCar, an automotive consulting firm in Santa Monica, Calif., said Toyota was trying to put its recalls behind it at a time when the company's U.S. sales have been flat while many rivals have taken advantage of a recovering auto landscape. But he said the rebuilding of the trust would take time.

"It's going to be a far lengthier process," Toprak said. "Consumer loyalty is not what it used to be. The choices are plentiful now."

Investors have soured on Toyota shares this year, sending them tumbling 17 percent compared with a less than 2 percent fall in the benchmark Nikkei 225 stock average. Reaction Tuesday was muted, however, with the issue finishing up 0.6 percent at 3,250 yen in Tokyo.

Separately, Toyota said Tuesday that it aims to boost global sales 3 percent to 7.7 million vehicles next year with global demand offsetting an expected drop in purchases in Japan.

The latest fines involve two separate safety problems affecting certain Toyota passenger cars and trucks.

The first case deals with recalls in 2009 and 2010 of about 5 million Toyota and Lexus vehicles with gas pedals that could become trapped in floor mats. Toyota had recalled 55,000 all-weather floor mats in 2007 to address pedal trapping, but the government said its investigation found that simply removing the floor mats was insufficient.

A high-speed crash involving a Lexus in August 2009 killed four people near San Diego, prompting the government to investigate the recall. After reviewing crash evidence and other data, NHTSA investigators concluded that Toyota failed to notify the government about a known safety defect within five days.

In the second case, Toyota conducted a recall in 2004 of Hilux trucks in Japan with steering relay rods that could break and affect steering. Toyota told U.S. regulators in 2004 that the safety problem was limited to vehicles in Japan and the company had not received similar complaints in the U.S.

But a year later, Toyota told NHTSA the steering defect was also found in several U.S. models and recalled nearly 1 million vehicles. NHTSA said in May 2010 it learned about complaints from U.S. consumers that Toyota failed to disclose to the government when it conducted the recall in Japan in 2004.

Toyota turned over thousands of documents to the government as part of the investigation. The two most recent fines are also the maximum allowed under law, and are adjusted for inflation.

"Safety is our top priority and we take our responsibility to protect consumers seriously," said U.S. Transportation Secretary Ray LaHood. "I am pleased that Toyota agreed to pay the maximum possible penalty and I expect Toyota to work cooperatively in the future to ensure consumers' safety."

The Japanese automaker faces dozens of lawsuits from families of people killed or injured in crashes linked to unintended acceleration. The government's safety agency has received about 3,000 reports of sudden acceleration incidents involving Toyota vehicles during the past decade, including 93 deaths. NHTSA, however, has confirmed only the four deaths from the California crash.

Material from The Associated Press was used in this report Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.