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Toyota AgreesTo Pay $16.4 Million U.S. Fine

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On: Mon, Apr 19, 2010 at 3:59PM | By: Sherry Christiansen

Toyota AgreesTo Pay $16.4 Million U.S. Fine

Toyota Motor Corporation agreed to pay the largest fine in history, to the National Highway Traffic Safety Administration (NHTSA) for allegations of not reporting safety problems in vehicles with defective accelerator pedals for 4 months. According to the NHTSA, the law states that any safety issue must be reported within 5 business days. Since Toyota failed to do so, a monetary fine was assessed for $16.4 million, the maximum penalty that NHTSA can assign.

Toyota, however, stated they agreed to the fine “to avoid a protracted dispute and possible litigation”; the automaker maintains their statement that they made a “good faith” effort to do a thorough investigation regarding the sticky gas pedals and that they have NOT violated any regulations.

After the NHTSA reviewed some of the 120,000 pages of documents submitted by Toyota, they found that Toyota knew about the problem since at least the end of September, when Toyota called for measures to repair defective auto parts in Canada, and European countries, but did not announce the recall of the models that were affected in the U.S. until January. According to the NHTSA, the documents showed that Toyota was aware of the deficiencies in U.S. vehicles (some 2.3 million defects) as well.

Transportation Secretary Ray LaHood said "We now have proof that Toyota failed to live up to its legal obligations; worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families."

Government safety regulators continue to review the documents so that legal compliance can be investigated, and Toyota will still face many lawsuits (over 200 have already been filed) related to personal injury, wrongful death, and consumer fraud. The U.S. Securities and Exchange Commission in New York is also investigating safety issues related to the faulty gas pedals in Toyota vehicles. It has been estimated that Toyota could end up paying out civil settlements in excess of $10 billion in the U.S. alone.

As a result of the publicity about the recalls, law suits, penalties, and subsequent effect on Toyota’s reputation, (resulting in a marked decrease in sales) the Japanese automaker’s net profit continues to suffer. On December 31st Toyota showed assets of over $23 billion and the Japanese automaker says that they expect to post a net profit of only $885 million at the end of the fiscal year.

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RoadKill | 4:10PM (Mon, Apr 19, 2010)

Insurance companies are gearing up to smack Toyota around when they try to recoup money they paid for claims in crashes involving sudden acceleration. If the drivers payed out any deductibles they may get money back as well...

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