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Delayed defect notification costs Toyota dearly

In 2010, Toyota was fined $48.8 million by U.S. regulators. The fines were levied in response to Toyota’s failure to properly notify authorities and respond to safety hazards including defective floor mats, sticky accelerators, steering issues and sudden acceleration of certain vehicle models. The record fine was meant to send a message both to Toyota and other auto manufacturers that U.S. regulators take defective vehicle parts that could lead to automobile accidents very seriously.

After 2010, no auto manufacturer, least of all Toyota, could claim that they were unaware that defective part notifications and proper recall procedures need to be followed to the letter. Failure to respond properly to safety hazards would lead to liability suits from regulators and consumers alike.

Shockingly, Toyota is now facing more than $17 million in fines for failure to report additional safety defects to the National Highway Traffic Safety Administration (NHTSA) as required. The fine is considered the maximum civil fine amount allowed currently by law.

In the wake of the 2010 sudden acceleration recall scandal, Toyota’s chief executive vowed before Congress that the corporation would overhaul its safety practices and quality control procedures. The company also insisted that it would report defects in a timely manner as required by law.

However, Toyota is currently being fined for withholding knowledge of over 60 reported incidents of floor mat pedal entrapment leading to unintended acceleration since 2009. Only after the NHTSA became aware of the issue and contacted Toyota about it in May of this year did Toyota bring their knowledge to light.

It would be easy to say that Toyota should have learned to inform the public about potential safety hazards by now. But it is quite possible that the NHTSA will have to treat Toyota with a “fool me once, shame on you; fool me twice…” kind of approach in order to protect the public from now on.

Source: Wall Street Journal, “Toyota to Pay $17.35 Million in Fines For Delayed Defect Reporting,” Joseph B. White, Dec. 18, 2012