Toyota to Pay Maximum $32M Fine to Settle Untimely Recalls

Toyota Motor (NYSE:TM) agreed on Tuesday to pay $32.25 million to settle two agreements with the National Highway Traffic Safety Administration for failing to recall certain vehicles on time.

While Toyota has not admitted any wrongdoing, the fines are the maximum allowed by law and are in addition to another $16.4 million paid by Toyota earlier this year in a related issue.

"I am pleased that Toyota agreed to pay the maximum possible penalty and I expect Toyota to work cooperatively in the future to ensure consumers' safety," said US Transportation Secretary Ray LaHood.

The first investigation dealt with recalls in early 2007 to late 2009 of five million vehicles with accelerator pedals that could become entrapped by floor mats. Toyota had initially recalled 55,000 all-weather floor mats in September 2007, however an August 2009 fatal crash in California that occurred as the result of pedal entrapment in a loaner Lexus led the automaker to eventually recall another 3.8 million, which was later expanded to include another 1.1 million vehicles.

In the NHTSA investigation, it was determined that Toyota failed to comply with federal law that requires all auto manufacturers to notify NHTSA within five business days of determining that a safety defect exists and to promptly conduct a recall.

The second investigation dealt with whether Toyota properly notified the agency of a safety defect in several models that could result in the loss of steering control. Toyota did not recall one million vehicles in the US for potential steering relay rod defects, which could cause the rod to crack or break, until 2005, a year after it pulled vehicles for the same reason in Japan.

Steve St. Angelo, Toyota’s chief qualify officer for North America, said the Detroit-based company was pleased to have resolved the issues.

“These agreements are an opportunity to turn the page to an even more constructive relationship with NHTSA and focus even more on listening to our customers and meeting their high expectations for safe and reliable vehicles,” he said.

Since issues involving unwanted acceleration emerged, Toyota has taken steps to mediate the situation, including launching its rapid-response SMART evaluation process and equipping all new US-made vehicles with advanced safety features, including its Star Safety System and Smart Stop Technology.

“As we have demonstrated in recent months, our North American operations now have a greater voice in making safety decisions, and we are taking appropriate action whenever any issues emerge,” Angelo said.

Toyota has recalled 11 million vehicles worldwide since November 2009.