Toyota faces $16M fine, accused of hiding defect | business | Hindustan Times
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Toyota faces $16M fine, accused of hiding defect

business Updated: Apr 06, 2010 21:32 IST

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The US government accused Toyota of hiding a “dangerous defect” and proposed a record $16.4-million fine on Monday for failing to quickly alert regulators to safety problems in gas pedals on popular models such as Camry and Corolla. The proposed fine is the most the government could levy for the sticking gas pedals that have led Toyota to recall millions of vehicles. There could be further penalties under continuing federal investigations. The auto maker faces private lawsuits seeking millions more.

The Japanese auto maker has recalled more than 6 million vehicles in the US, and more than 8 million worldwide, because of acceleration problems in multiple models and braking issues in the Prius hybrid. Documents obtained from the auto maker show that Toyota knew of the problem with the gas pedals in late September but did not issue a recall until January.

“We now have proof that Toyota failed to live up to its legal obligations,” US Transportation Secretary Ray LaHood said.

“They knowingly hid a dangerous defect for months from US officials and did not take action to protect millions of drivers.”

How Toyota decides to respond to the fines could pose a dilemma for the auto maker. If Toyota pays the fines, the admission could hurt it in courtrooms. But battling the government over the penalties could undermine Toyota’s attempts to move on from the recalls.