Financial News

  • 18 December 2012, 19:43

Toyota Hit With Record US Fine Over Recalls

Toyota has been hit with a record $17.4m (10.7m) fine for failing once again to quickly report problems to US regulators and for delaying a safety recall.

The penalty from the National Highway Traffic Safety Administration - the agency that monitors vehicle safety - is the maximum allowed by law.

It is the fourth fine levied against Toyota in the past two years for similar infractions in the US, and the largest single fine ever assessed against a car company over safety defects.

But it may not be much of a deterrent as it represents a tiny fraction of Toyota's profits, which were $3.2bn (1.98bn) in the third quarter alone.

About 154,000 of the 2010 Lexus Rx 350s and RX 450h models had to be recalled because the driver's-side floor mats can trap the accelerator pedal and cause the vehicles to speed up without warning.

The NHTSA said Toyota took a month to report the problems, instead of the five days stipulated by US law.

Toyota said it agreed to pay the penalty without admitting any violation of the law.

It also pledged to strengthen data collection and evaluation to make sure it takes action more quickly.

The problem was similar to troubles from 2010 that prompted a series of embarrassing safety recalls by the Japanese company and landed it with fines totalling $48.8m (30m) for three violations.

Toyota has been forced to recall more than 14 million vehicles globally to fix sticky pedals and floor mats.

The recalls tarnished the company's strong reputation for reliability and cut sales. Recently its fortunes rebounded as it appeared to put safety problems behind it.

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