As you've probably heard by now, Toyota (NYSE: TM ) , which was slapped two weeks ago with the largest fine ever thrown at an automaker by the U.S. government, decided Monday to pay up rather than fight it out in court.
That wasn't much of a surprise. Toyota has enough bad press clippings in its 2010 folder already. It didn't need the months of headlines that would accompany a protracted court battle. And fighting the fine would have run counter to Toyota's recent attempts to look at least somewhat contrite.
But this part surprised me: The Feds let Toyota pay without admitting guilt.
Why is that a surprise? Because it's almost like not punishing them at all.
What the heck happened?
What happened to all that tough talk we heard from the feds a couple of weeks ago? You know, where Transportation Secretary Ray LaHood went on about how Toyota "hid a dangerous defect for months" and "did not take action to protect millions of drivers"? And that letter they sent to Toyota pointing out that the fine could have been (and might have been) some $13.8 billion -- $6,000 per recalled car -- if total possible fines hadn't been capped by law?
Instead, we seem to have gotten a cozy win-win scenario. The government can act like it accomplished something, while Toyota pays its $16.4 million-with-a-mere-'m' fine and quietly goes back to business.
It's perfectly clear why this was Toyota's preferred scenario: The amount of money is a mere drop in the bucket of cash it's spending on incentives and advertising in the U.S. at the moment. It's a bargain price to pay to put this piece of the unintended-acceleration scandal on the back burner.
And since the company didn't admit guilt, the fact that Toyota paid the fine is less likely to carry weight in the tidal wave of litigation presently crashing down on Toyota's shores.
That's the part that gets me. If the feds really wanted to hit Toyota where it hurt, they would have insisted that Toyota admit its guilt and face the consequences in those lawsuits, which could have been very serious indeed.
But instead, we get a little bit of kabuki theater, where everyone plays their assigned roles and nothing actually happens.
Meanwhile, the recalls continue.
Another week, another bunch of Toyota recalls
Last Friday afternoon brought yet another surprise, as Toyota announced the recall of some 600,000 Sienna minivans for a problem that sounds trivial until you think about it: The cable that holds the van's spare tire in place under the car can rust through, apparently, causing the tire to fall off. Like, onto the highway. Possibly at high speeds. In traffic. Not good, but repair should be straightforward, and Toyota's on the case.
Despite the size of the Sienna recall, the damage to Toyota should be minimal -- the problem should be relatively inexpensive to fix, it's not a lurid-local-news-headlines kind of defect, and frankly, the public is probably suffering from recall fatigue where Toyota is concerned.
But it will be interesting to see how the latest developments affect Toyota in the marketplace, where its rivals are continuing to try to take advantage. According to Edmunds, Honda (NYSE: HMC ) is mounting an uncharacteristically aggressive incentives campaign at the moment, and Ford (NYSE: F ) , Nissan, and others are continuing offers of "zero-percent financing" on several models, just as Toyota winds down its own national incentives programs.
On the other hand, Monday's announcement that Toyota would recall 9,400 Lexus GX 460 SUVs wasn't much of a surprise at all. Consumer Reports issued its scathing review of the vehicle's handling characteristics last week, labeling it a "safety risk." Toyota says that it has confirmed the existence of the problem cited by Consumer Reports and developed a repair, which involves an update to the software controlling the vehicle's stability control systems. Meanwhile, sales of the GX 460 have been suspended until they're all fixed.
Memo to Toyota: That's how you're supposed to handle a recall. You admit the problem right away, make your engineers work all weekend until they find a fix, and then get all the affected vehicles fixed ASAP. Well done.
Now why couldn't you have done that in the first place?
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