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Toyota fined $17.35 million for U.S. floormat recall delay

A visitor is reflected on a Toyota car at the company's showroom in Tokyo October 18, 2012. REUTERS/Toru Hanai
A visitor is reflected on a Toyota car at the company's showroom in Tokyo October 18, 2012. REUTERS/Toru Hanai

By Bijoy Anandoth Koyitty

(Reuters) - Toyota Motor Corp has agreed to a record fine of $17.35 million for failing to report a safety defect to the U.S. government in a timely manner, but maintained it has done nothing wrong.

Toyota announced a recall of 154,036 2010 Lexus RX 350 and RX 450h vehicles in June to address a risk that a loose floormat could force down the accelerator pedal.

The U.S. Department of Transportation said the fine was the highest ever for not initiating a recall in a timely manner. (http://r.reuters.com/ceh74t)

This year's recall followed a string of damaging safety recalls from Toyota, the world's top automaker, since 2009.

Certain unintended acceleration claims made against some models caused a worldwide recall of nearly 19 million vehicles from late 2009 to early 2011.

Toyota in a statement said it agreed to the settlement without admitting any violation of its U.S. safety obligations.

"We agreed to this settlement in order to avoid a time-consuming dispute and to focus fully on our shared commitment with NHTSA to keep drivers safe," Ray Tanguay, chief quality officer of Toyota North America, said in a statement. (http://r.reuters.com/rah74t)

The Department of Transport's National Highway Traffic Safety Administration (NHTSA) said it contacted Toyota in May after it noticed a trend of "floor mat pedal entrapments" in vehicle owner questionnaires.

Toyota advised the safety agency a month later that it was aware of 63 alleged incidents and said it would launch the recall.

Federal law requires automakers to notify the agency within five business days of determining that a safety defect exists and to conduct a recall.

"Every moment of delay has the potential to lead to deaths or injuries on our nation's highways," said David Strickland, the Administrator of the highway safety agency.

BUMPY RIDE

The penalties come a month after Toyota said it would recall about 2.77 million vehicles worldwide, including some of its popular Prius hybrid cars, for steering and water pump problems.

The carmaker was fined a total of $48.8 million in civil penalties in 2010 as a result of three separate investigations into its handling of vehicle recalls.

Analysts said Tuesday's NHTSA fine would not have any significant impact on demand.

"Consumers tend to gloss over these events. A lot of the decision-making is based on products in the showroom, and in that respect, Toyota is very competitive," Polk analyst Tom Libby said.

Matthew Stover, an analyst with Guggenheim Securities, said there would be minimal financial impact from the penalties.

"Recalls in general don't have an impact on sales like they used to," Stover said.

Toyota maintained from the start of its worst safety crisis ever that the floor mat pedal entrapment issue was linked to floormats pinning gas pedals down rather than a systemic electronic problem.

Department of Transportation Secretary Ray LaHood said in early 2011 a federal probe essentially agreed with the company's claim.

The U.S. auto safety regulators in April this year announced a proposal that would require brake override systems -- that can stop a vehicle if the accelerator pedal gets stuck open -- on all new passenger cars and trucks, likely by the 2015 model year.

(Additional reporting by Paul Lienert in Detroit; Editing by Don Sebastian and Rodney Joyce)

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