On Tuesday, the National Highway Traffic Safety Administration announced it has settled with Toyota Motor (NYSE:TM) over allegations that the company failed to report a safety defect to the federal government in a timely manner.
The fine agreed to by the parties was set at $17.35 million, the maximum fine allowable under law, and represents the largest civil penalty ever assessed against a car company for violations stemming from a recall.
The matter in question involved a June 2012 recall to address the potential for accelerator pedal entrapment caused by unsecured or incompatible driver’s side floor mat, according to Toyota. The company said it admits no violation of its obligations under the U.S. Safety Act and said it "agreed to this settlement in order to avoid a time-consuming dispute and to focus fully on our shared commitment with NHTSA to keep drivers safe."
In a statement, NHTSA said federal law requires auto manufacturers to notify NHTSA "within five business days of determining that a safety defect exists or that the vehicle is not in compliance with federal motor vehicle safety standards and to promptly conduct a recall." But when NHTSA noticed multiple complaints arising earlier this year, involving "floor mat pedal entrapment" in model year 2010 Lexus RX 350s, and notified Toyota of its suspicions in May, the company took a full month before responding.
Toyota acknowledged that it was aware of 63 such incidents alleged by its customers, and in June agreed to recall 154,036 Model Year 2010 Lexus RX 350 and Model Year 2010 RX 450h vehicles to address possible floor mat pedal entrapment.
According to the NHTSA, the last time Toyota faced civil penalties was in 2010, when the automaker agreed to pay $48.8 million as a result of three separate investigations into its handling of recalls. The automaker paid maximum civil penalties for violations stemming from pedal entrapment, sticky pedal and steering relay rod recalls.
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