Toyota in Trouble

Molly Wider
April 13, 2010

Molly Wider
http://bhmfinancial.com

The Japanese automaker, Toyota, has already been inundated with 138 private class-action lawsuits, 100 of the including personal injury and wrongful death cases in the United States that have stemmed from questionable safety standards. The company now faces an additional dilemma of whether to accept a record fine of $16.4 million US that could cast an admission of 'wrong doing' on their part, adding more negative publicity to the company's quickly tarnishing reputation. The proposed fine is the most the United States government could issue. Toyota has until April 19 to accept or decline.

Toyota has found itself in a world of trouble after the US Transportation Department found them guilty of hiding a dangerous defect and failing to alert regulators quickly enough to the safety issues. These defects were found on some of Toyota's best selling models such as the Camry and Corolla. The company has recalled more than six million US built vehicles and more than eight million world wide due to acceleration and breaking problems in multiple models. 270,000 vehicles have been recalled in Canada over sticky break concerns; 3,300 of them in the Prius hybrid.

The US Transportation Department felt that Toyota had failed to live up to its legal obligations when 70,000 pages of records were provided from the company showing that Toyota knew of the safety default with sticky breaks in more than 2.3 million vehicles back in September of 2009, but failed to issue a warning until the following January. They are accused of knowingly hiding a dangerous defect from US officially and not taking appropriate action to protect the millions of driver and families who bought their vehicles. Under US law, automakers have five days to notify NHTSA if a determined safety defect exists.

The second largest fine ever issued to an auto manufacturing company was back in 2004 when GM was slapped with a hefty $1 million fine for not responding quickly enough to a recall on almost 600,000 vehicles that had windshield wiper failure.

It may be easier for Toyota to just pay the fine as opposed to fighting and continuing to bring negative attention to its products. The company has already announced that it appointed a new chief quality officer for North America and has given the North American office a greater role in making safety related decisions. The vehicles in question are the 2007-10 Camry, 2009-10 Corolla, 2009-10 Matrix, 2005-10 Avalon, 2010 Highlander and 2007-10 Tundra. To date, 52 deaths have been related to the malfunctioning breaks.

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