Toyota's $1.2 billion fine, GM recall highlight defects in U.S. auto safety
The announcement today by U.S. federal prosecutors of a $1.2 billion payment by Toyota to avoid prosecution over safety problems linked to 37 deaths closes the chapter on a dark moment for the world's largest automaker — just as General Motors struggles to answer questions about its own delayed recall of 1.6 million vehicles linked to at least 12 deaths.
But the Toyota settlement and the GM ignition recall both highlight the key flaw in the safety net that's supposed to protect Americans from dangerous flaws in their vehicles: Just because you have a defect doesn't guarantee anyone will hear — or believe — you.
At least so far, Toyota's crimes from its sudden acceleration and stuck pedal recalls from 2009 and 2010 are an order of magnitude greater than what's been shown from GM. GM engineers knew about a problem as early as 2001 with Chevy Cobalts and Saturn Ions shutting off due to bad ignition switches, but failed to ask for a recall until earlier this year. Toyota executives also knew about potential problems with floor mats and gas pedals for years, but even after a preliminary recall misled consumers and the National Highway Traffic Safety Administration about the true scope and nature of the defects until forcefully threatened by regulators in early 2010. The automaker eventually recalled 9.4 million vehicles.
Toyota executives testify before a U.S. House committee in 2010
Had Toyota not settled with the U.S. Department of Justice, federal prosecutors were prepared to charge the company with wire fraud for selling thousands of vehicles from late 2009 through March 2010 that its engineers knew to have defective accelerator pedals. And while $1.2 billion will ding the profits of the world's largest automaker for a quarter, the total could have been far higher; had NHTSA's fines not been limited by federal law to $17 million per defect case, it could have fined Toyota $13 billion.
It's still the largest penalty ever paid by an automaker in U.S. history.
"Put simply, Toyota’s conduct was shameful," said U.S. Attorney General Eric Holden. "It showed a blatant disregard for systems and laws designed to look after the safety of consumers. By the company’s own admission, it protected its brand ahead of its own customers.