April 20, 2010 in Business

Toyota accepts fine, recalls SUV

Automaker says promise to pay isn’t admission it broke law
Ken Thomas Associated Press
 
File Associated Press photo

A 2010 Lexus GX 460 and other Lexus vehicles are seen at a dealership in Portland, Maine. A Transportation Department official said Monday that Toyota will recall the 2010 Lexus GX 460 to address a potential problem with the SUV rolling over.
(Full-size photo)

WASHINGTON – Toyota hurriedly ordered recalls of nearly 10,000 Lexus SUVs for possible rollover dangers Monday and agreed to a record $16.4 million fine for a slow response in its broader earlier recall, scrambling to fix safety worries that threaten the Japanese auto giant’s reputation.

The fine, the maximum under law, could hurt Toyota Motor Corp.’s image more than its financial bottom line: The penalty is the equivalent of a little more than $2 for every vehicle the company sold around the globe in 2009. And analysts said it would have little impact on dozens of private lawsuits, which have been combined before a federal judge in Santa Ana, Calif.

“In the court of public opinion, paying the fine speaks volumes. But at the end of the day, the fines are simply background noise in terms of the civil litigation,” said Richard Arsenault, a plaintiff’s attorney in Alexandria, La. “What’s really important are the facts that were the catalyst for the fines.”

Addressing new safety concerns, Toyota said it would recall all 9,400 of the 2010 Lexus GX 460s that went on sale in late December – 5,600 that have been sold and 3,800 still at dealers or elsewhere in the distribution pipeline. The announcement came less than a week after Consumer Reports issued a warning about the SUVs, a sharp contrast to the government’s contention that Toyota took four months to order its huge recall of other models over sticking gas pedals.

For the Lexus recall, Toyota said dealers would update software in the stability control system, which is supposed to help prevent rollovers. Toyota already had halted sales of new GX 460s and begun tests on all of the company’s other SUVs.

The government accused the company of hiding the earlier defects involving gas pedals, a contention Toyota rejected, though it agreed to pay the fine.

Transportation Secretary Ray LaHood said Toyota “put consumers at risk” by failing to promptly notify authorities about potentially defective accelerator pedals on 2.3 million vehicles. LaHood said Toyota knew about the problem in late September but didn’t issue the recall until late January, violating a federal law that requires an automaker to notify the government of a safety defect within five business days.

Toyota said it agreed to the fine to avoid a lengthy legal battle but denied the government’s allegation that it broke the law.

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