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Toyota to pay $32.4M in extra fines

Updated: 2010-12-21 19:34

(Agencies)

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Toyota to pay $32.4M in extra fines
A visitor looking at Toyota Motor's vehicles is reflected on a black vehicle at its showroom in Tokyo November 5, 2010. [Photo/Agencies]

WASHINGTON – Toyota Motor Corp. has agreed to pay the government a record US$32.4 million in additional fines to settle an investigation into its handling of two recalls at the heart of its safety crisis.

The Transportation Department said late Monday the civil penalties will settle investigations into how Toyota dealt with recalls over accelerator pedals that could get trapped in floor mats, and steering relay rods that could break and lead to drivers losing control.

The latest settlement, on top of a US$16.4 million fine Toyota paid earlier in a related investigation, brings the total penalties levied on the company to US$48.8 million. It caps a difficult year for the world's No. 1 automaker, which recalled more than 11 million vehicles globally since the fall of 2009 as it scrambled to protect its reputation for safety and reliability.

Toyota's board of directors agreed to pay the fines on Tuesday at the company's board meeting in Japan, according to an official familiar with the case, and the company said it agreed to the penalties without admitting to any violations of US laws. However, that does not free Toyota from potential civil and criminal penalties in private lawsuits and other federal investigations.

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The person had spoken earlier Monday on condition of anonymity ahead of the formal announcement.

Steve St. Angelo, Toyota's chief quality officer for North America, said in a statement that the company has "worked very hard over the past year to put these issues behind us and set a new standard of responsiveness to our customers. These agreements are an opportunity to turn the page to an even more constructive relationship with NHTSA (National Highway Traffic Safety Administration)."

He said Toyota was grateful to its customers for "their confidence in the quality and reliability of our vehicles."

In April, Toyota agreed to pay the maximum fine allowed under law for a single case - US$16.4 million - for failing to promptly alert US regulators to safety problems over sticking accelerator pedals. Under federal law, automakers must notify NHTSA within five days of determining that a safety defect exists and promptly conduct a recall.

At the time, Toyota denied attempting to hide a safety defect and said it agreed to the penalty to avoid a lengthy legal battle with the government.

Jesse Toprak, vice president of industry trends and insight at TrueCar, an automotive consulting firm in Santa Monica, Calif., said Toyota was trying to put its recalls behind it at a time when the company's US sales have been flat while many rivals have taken advantage of a recovering auto landscape. But he said the rebuilding of the trust would take time.

"It's going to be a far lengthier process. Consumer loyalty is not what it used to be. The choices are plentiful now," he said.

The latest fines involve two separate safety problems affecting certain Toyota passenger cars and trucks.

The first case deals with recalls in 2009 and 2010 of about 5 million Toyota and Lexus vehicles with gas pedals that could become entrapped in floor mats. Toyota had recalled 55,000 all-weather floor mats in 2007 to address pedal entrapment, but the government said its investigation found that simply removing the floor mats was insufficient.

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