NHTSA’s fine against Toyota doesn’t sting, but Lahood’s words do

Toyota has two weeks to decide how to respond to NHTSA's record-setting fine of $16.4 millionfor the company's tardy notification to the federal safety agency about its pedal-sticking problem. Toyota notified its distributors in 31 European countries last September of a "repair procedure to address complaints by customers in those countries of sticking accelerator pedals, sudden rpm increase and/or sudden vehicle acceleration," but didn't inform NHTSA of the problems until January, a clear violation of federal law requiring notification to NHTSA within five business days.

Toyota can accept the fine and move on or contest the judgment, further prolonging the unwelcome media spotlight into the company's prolonged crisis.

Of course, $16.4 million is pocket change to Toyota, which counts its profits (or its losses in 2009) in the billions of dollars. So it's an easy call, right? The judgment might even be seen as helpful to Toyota in that it provides closure, allowing the company to move on, something it desperately wants to do.

Not so fast. Accepting the judgment means agreeing with the assessment that the company knowingly hid a dangerous defect, according to NHTSA Administrator Ray Lahood. Here's his full quote:

“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “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.”

The company can't possibly be seen as agreeing with such a harsh judgment, even if it is demonstrably true. It would haunt Toyota in every lawsuit it fights.

Look for the auto giant to formally contest the fine while sending clear backdoor signals to NHTSA that it wants the appeal process to come to a quick conclusion and it will then happily pay the fine.

- Jon Harmon

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