The Politics of Toyota’s $16 Million Dollar Fine
Jason Lancaster | Apr 05, 2010 | Comments 27
Yesterday, NHTSA announced a record $16.4 million dollar fine against Toyota for “failing to notify the auto safety agency of the dangerous ‘sticky pedal’ defect for at least four months.” Unfortunately, this announcement seems to be about more than penalizing Toyota for making a mistake – this move is political. Here’s why:
The inconsistency between NHTSA fines of GM and Toyota is profound.
1. The penalty is excessive and inconsistent by any standard. NHTSA fined GM $1 million dollars in 2004 for the same reason – GM failed to recall 581k defective windshield wipers in a timely manner. Some might argue Toyota’s oversight was worse because Toyota recalled more vehicles (2.3 million cars vs. GM’s 600k), or because Toyota’s recall was more of a safety issue, but this isn’t the whole story:
- GM waited two years to announce a recall. Toyota waited 4 months.
- GM’s recall was linked to at least one crash. Toyota’s sticky pedals? They haven’t been linked to one crash.
- GM’s 2005 penalty was punitive in nature. According to court documents, NHTSA’s attorney “complained that the company’s plodding pace was not an isolated incident.”
- GM’s 2005 penalty was not announced publicly. This is a critical distinction between NHTSA’s actions yesterday and NHTSA’s actions 5 years ago.
So, to summarize, the last time NHTSA penalized an automaker for being slow on the uptake, the fine was 16 times smaller, the automaker in question waited 2 years to begin their recall, and NHTSA didn’t issue a press release announcing the fine.
At a minimum, it’s clear that NHTSA’s decision to fine Toyota $16.4 million is inconsistent. Here’s why it’s political…
2. LaHood is Prone to Political Posturing. We’re not fans of Ray LaHood at TundraHeadquarters. It was foolish and irresponsible of LaHood to tell Toyota owners to “stop driving” their cars during the early days of the pedal recall. No government figurehead – let alone the man who represents our country’s vehicle safety organization – should engage in such wild hyperbole. Yet LaHood has done this many times since becoming the DOT secretary.
- LaHood is credited as saying that the success of GM and Chrysler is essential to “get the industry going again for jobs” and saying that Chrysler is as “innovative and creative as I’ve seen.” Aren’t government officials supposed to be impartial? Besides, doesn’t Toyota employ hundreds of thousands of U.S. citizens directly and indirectly?
- LaHood was criticized by the NY Times for claiming his department’s newest policy document represented a “sea change” in transportation, despite the fact the policy was actually quite moderate. Politicians are naturally prone to exaggeration, but claiming a mild policy adjustment represents a “sea change” tells us a lot about who LaHood really is (hint: he’s an idiot).
- LaHood told a Chicago radio station that he forced Toyota to conduct a recall on January 27th, yet the following day said quote “I have no criticism of Toyota on this [recall], They did what they’re supposed to do.”
- LaHood also issued a statement saying that NHTSA would “hold Toyota’s feet to the fire” over safety issues.
LaHood, as you can see, is a politician prone to ‘foot-in-mouth’ disease…but that doesn’t prove there’s a political agenda involved.
3. Fining Toyota all but guarantees a huge civil lawsuit loss. By fining Toyota the maximum amount allowable under federal law, NHTSA is sending a message to product liability lawyers across the country: If you sue Toyota, you’ll be able to effectively argue that Toyota acted with “conscious indifference,” an important legal distinction in a civil suit (read more about Toyota’s civil liability issues).
This fine isn’t just designed to ‘send a message’ – it’s intended to cost Toyota billions in civil lawsuits. Fixing it so that Toyota takes a multi-billion dollar loss is almost as good as handing a check to Toyota’s competitors (but much more feasible politically).
In all honestly, Toyota most definitely deserves a NHTSA fine, and they probably deserve to lose some money in a few lawsuits. However, when you look at the severity and inconsistency of Toyota’s fine, LaHood’s penchant for political hyperbole, the fact that NHTSA made this announcement public (instead of keeping it secret like they did with GM 5 years ago), and the impact this fine will have on Toyota’s civil cases, and it becomes very difficult to argue this fine isn’t political in nature.
Comments? Agree? Disagree?
Filed Under: Auto News
This is a political issue driven through the media. Here’s a clear case of the proverbial “snow ball effect”. I don’t know if LaHood is an idiot but I certainly think he’s a puppet on strings. I agree Jason, this is strictly political. Toyota can absorb the 16.4 Mil CP. They’ll mitigate and immediatley get 35% off the CP. Then they’ll go to court and battle in front of a federal admin judge. More than likely in the end they’ll pay around 8 mil. The bigger issue is the future civil lawsuits that you mentioned. This is going to be huge loss for Toyota. Don’t forget the criminal investigation. If that goes further and charges are brought up, I wonder if Toyota will ever be able to recover! So in the end the politicians against Toyota will get what they want.
Toyota needs to get there dealers armed and attack this like they are in a war. Have every person who hinted at this attempted rape fired then blacklisted. Don’t stop until the NHTSA is begging for mercy then give them none. I have to mercy for ignorance or wrong doers. CRUSH THEM! in a loving and peacful way.
Here we go with the conspiracy theories again.
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So trying to compare a windshield wiper issue to an SUA issue makes a good argument? Linking these wipers to 1 accident, while the Toyota recall could potentially be linked to roughly 2200+ events, makes a HUGE difference. You can say none of the events have been linked, but at the same time you can’t say none have been linked. Otherwise, if Toyota and the NHTSA didn’t have evidence of such occurrences, then why did Toyota announce a recall? Out of the goodness of their pocketbook?
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Maybe the difference between now (2010) and then (2005) is the government is taking a more proactive approach. Maybe the NHTSA is taking consumers more seriously now compared to then. Maybe they are sending a message to all automakers that such actions will no longer be tolerated. Keep in mind, back in 2005, GM hadn’t received any funds from the government or taxpayers (bailout), so there was no need to prop GM up then.
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Your article also sounds like the fining of GM back in 2005 in no way impacted civil lawsuits against GM, but the fine to Toyota will impact the civil lawsuits of today. How is that? Wouldn’t they be on the same playing field in the civil cases then, since the NHTSA found both at fault and fined both, regardless of the amount fined?
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We know LaHood isn’t the best representation for the NHTSA, but you seem make it out that it was his sole discretion to fine Toyota. Whether you agree or not, like LaHood or not, the fact is he didn’t make the final decision. Sure he had a voice in the decision, and possibly some influence, but he’s not the sole reason for the fine.
[…] this: The Politics of Toyota’s $16 Million Dollar Fine | Tundra Headquarters __________________ MIDNIGHT RIDER THE NEW HEARTBEAT OF AMERICA AFTER GAS PEDAL […]
[…] LOL First off he could have a replacement pedal ordered and put on. Here's your piece on NHTSA: The Politics of Toyota’s $16 Million Dollar Fine | Tundra Headquarters __________________ MIDNIGHT RIDER THE NEW HEARTBEAT OF AMERICA AFTER GAS PEDAL […]
[…] The Politics of Toyota’s $16 Million Dollar Fine | Tundra Headquarters __________________ MIDNIGHT RIDER THE NEW HEARTBEAT OF AMERICA AFTER GAS PEDAL REPLACEMENT […]
Here’s your theory there Justin
http://www.autoblog.com/2010/0.....-corroded/
Justin we will see if NHTSA is taking a different approach Justin. Since Jason has to check my last post then you can tell me why it took longer that Toyota to get this out to recall. I expect the same treatment or there you go Justin it’s political.
It’s political? Well then, if so, it’s not to benefit GM as the government or NHTSA is investigating GM for a possible recall now on 6.2 Million vehicles.
http://www.autoevolution.com/n.....18871.html
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The same treatment, please. Today everyone should be treated the same. Now trying to treat Toyota the same as GM, regarding an issue that happened 5+years ago isn’t treating Toyota the same, it would have benefited Toyota. What happens today is different than what happened in 2005, and is different than what happened in the 80’s or 70’s, etc. If we played the “same treatment” game, then we’d be stuck in the ice ages on vehicle recalls, fines and expectations. So should the government treat Toyota the same as they did Ford when they had the Pinto issue, or ignition switch issue or Firestone recalls? Nope, sorry, those were years ago. Times change and we learn from our mistakes. The NHTSA has clearly learned they have to take more action on issues for the consumers sake. So just because GM got a certain penalty in 2005, doesn’t mean Yota should get the same penalty as 5 years ago on roughly 2/3 more vehicles. Now had this Toyota issue happened in 2005, sure the same $1M fine would be okay, because they would occur during the same time and that would constitute equal treatment. But we are talking about a pentaly for today, 2010, not 2005. And as we know, everything continues to go up in price. It’s like saying you want to buy a new 2010 XYZ vehicle for the price a brand new 2005 XYZ vehicle sold for.
My theory? So GM is being investigated for brake line corrosion, and? Just as Ford is being investigated for the F150 air bag deployment. Just like Toyota had been investigated for SUA, the Prius brake problems, etc. GM is cooperating with the NHTSA. Difference is, NHTSA isn’t being as private about their investigations anymore, as they have been in the past. Now any and every investigation is now becoming public knowledge. Kind of warning the public of a potential problem.
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What’s your point again Mickey?
Jeremy what are you trying to say? “Rape fired then blacklisted”, “I have to mercy for ignorance”. Does anyone understand that?
Rich – I think the snow ball effect is right. My gut is that LaHood feels compelled to send a message, but that’s a problem to me. His job is to run the Department of Transportation and NHTSA – ‘holding Toyota’s feet to the fire’ doesn’t seem like appropriate language from a senior official of our government.
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Jeremy – You so crazy.
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Justin – I think you make some great points, and honestly I thought long and hard about this post. There’s a lot of gray area. However, for me it all comes down to this:
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The letter of the law is that NHTSA can only penalize Toyota for *waiting* to begin a recall. The penalty is NOT being levied because of the severity of the safety problem – that’s not what the law says. NHTSA is fining Toyota because they waited to act. My problem is, Toyota waited 4 months and GM waited 2 years. GM’s $1 million dollar penalty (which was a record in 2005) was the result of a ‘pattern of behavior.’ That means that GM waited on more than one recall. NHTSA is fining Toyota the legal maximum for waiting 4 months on a single occasion. Where’s the consistency?
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I’m not saying that Toyota doesn’t deserve a penalty, but who came up with this number? 16 times the amount GM was penalized in 2005, despite the fact Toyota waited only 1/6th the amount of time? Admittedly, I don’t know what the right number is. However, the legal max seems far too high compared to what NHTSA has done in the past.
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The fact that you believe LaHood didn’t come up with this number alone only proves my point. If LaHood isn’t responsible for what one of his departments does, then who is? The President? If it was just one of LaHood’s minions that came up with this number, why has LaHood commented so publicly on this issue over the last few months? Why has LaHood threatened Toyota on multiple occasions? Either LaHood overstepped his bounds and usurped one of his underlings by getting involved in a NHTSA matter, or the trail goes all the way to Obama. Either way, it only proves my point.
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Finally, how do you reconcile the fact that NHTSA didn’t issue a press release in 2005? If NHTSA didn’t see the need to publicly chastise GM 5 years ago, what made them decide to do it now? More inconsistencies.
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I agree that there’s a fine line here. At some level, everything a government does is political, and that’s not necessarily a bad thing. I think Toyota deserves a hefty fine, and I think the civil liability they’ll endure was brought on by Toyota’s own foolishness. They deserve what they get. MY problem is, this looks like a blatant attempt for LaHood and Obama to cheer for the UAW, and as I’ve said before there’s an obvious conflict of interest here as long as the government owns a significant portion of both GM and Chrysler. In other words, there’s a lot of politics at play here.
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Mickey – Good link. If NHTSA determines that GM should have done a recall, I wouldn’t expect anything less than the maximum fine possible under the law. To fine GM anything less would be grossly unfair to Toyota. Of course, we’ll have to see if this issue is really a big deal or if it’s just an isolated thing. For the sake of 6.2 million GM truck owners, let’s hope this is a non-issue.
Jason: I totally understand your view point on LaHood. I understand he works for the US government, and many see this as a political issue. Regarding some of his comments, I think too many people want others to be PC (politically correct), rather than a person providing their true thoughts and feelings. That’s part of our problem in society today, which we’ll leave for another thread, but too many people get offended when others state their true feelings rather than be politically correct. I’d rather someone tell me how they see it than them walk that tight rope simply to appease everyone.
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As you’ll notice in the link below, the NHTSA started receiving complaints in 12/03. There we roughly 6 investigations into SUA, with very little being done. We now know the NHTSA has been severely understaffed and lack the technical equipment to thorough test/investigate vehicles. So I do not blame Toyota completely for this SUA problem dragging on for so many years. The below quote is what concerns me and possibly why LaHood seems to have an agenda against Toyota. Why does the NHTSA have to push Toyota to move faster on safety issue?
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Transportation Secretary Ray LaHood has said that federal officials had to push Toyota “every step of the way” to act faster on the safety issues. NHTSA even sent its acting administrator, Ron Medford, to Japan in December to meet with senior Toyota officials and urge the company to move faster on safety issues.
http://detnews.com/article/201.....n–04
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I’m sure, as with any penalties in today’s day and age and as many experts expect, the fine will be reduced greatly. Some analysts expect a figure more around $7M or so. And again, Toyota may have stalled 1/6 the time as GM did, but keep in mind the NHTSA is getting a black eye for not doing what they have been charged with for many years. Now that the spot light is on them, as well as Toyota, they may be using Toyota as an example, or simply finally doing what they’ve supposed to being doing for years on end. To me, whether they are simply now doing their job, or using Toyota as an example, I think this is good for consumers. If they are using Toyota as an example, hopefully all other makes will catch the NHTSA drift and make sure they are proactive on such safety issues of face severe penalties. And again, on the publicly chastising piece, we now know the NHTSA hasn’t been doing their due diligence for many years. Since the spot light is being put on them, they must now show the public they are reacting and taking complaints seriously. I don’t see that as inconsistencies, I see that as the NHTSA finally doing their job, where as they haven’t been to the fullest in the past.
Agree Jason with hoping it’s a non issue. Justin my point is this investigation they have now the corroded brake lines not the issues back in 05 or winshield wiper fluid etc. They should be treated the same way period. If GM is at fault then the same treatment. It doesn’t have to be the same amount in fines but the same treatment. If NHTSA doesn’t disclose it’s findings then we are back in your court. I just want the same for all manufacturer’s.
Also Justin NHTSA hasn’t been consistent either.
Mickey: Agree 100% on treating GM the same as Toyota in regards to the brake line corrosion, or to Ford on the airbag deployment investigation. Never said they shouldn’t be treated the same TODAY. My reference is people saying Toyota is getting punished worse than GM did in 2005. Which to me is understandable and logical, since we are in a different day and age and circumstances are different today than they were 5-6yrs ago.
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I fail to understand what you mean about consistent. If we look back from years past, there may not have been much consistency. Heck, I think many of the imports received better treatment in the past from the NHTSA than the domestic received. If after the ignition switch recall, CC recall, and Firestone ordeal, do you think if Ford had the SUA complaints that Toyota had since 1999/2000, that the NHTSA would have brushed those to the side like they did for Toyota? Personally, I think they gave Toyota the benefit of the doubt on the matter due to their stellar history. They wouldn’t have given any of the domestics the same benefit as they did Toyota. So in the past, the inconsistency has benefited Toyota. Now after these events, maybe the NHTSA will treat all complaints, no matter make/model the same.
Wonder what this means and may lead to???
http://hosted.ap.org/dynamic/s.....TE=DEFAULT
if it looks like sh*t, and it smells like sh*t, then its probably sh*t.
Nuff said.
Consistency isn’t really the right word for the circumstances, precedence is more appropriate. However, precedence doesn’t carry the the same authority in a civil penalty case as it would in a criminal case. You can’t compare CP notices from one campany to another company because of the variables. A matrix is used to determine the CP and one item on that matrix is the ability for a company to pay. In other words, a small business wont pay as much as a big business. A company like GM (considering their financial situation) wont be assessed a CP as much as a company like Toyota. So trying to compare CP’s is like trying to compare apples and oranges. Justin, you’re probably right on the mark with the CP ending up as $7M. As far as LaHoods comments, well he can take the credit for those himself! I think the real push behind this is political. Industry lobbyism (corporate money) push the politicians to pressure govt agencies with regard to large cases. This all changes when death is involved and the media takes up the crusade. At that point, the CYA plan is implemented and thus you have what you see is happening to Toyota.
Justin – You’re saying you see NHTSA actions as inconsistent, but only because NHTSA wasn’t doing their job before and now they are? Makes sense. I agree NHTSA wasn’t doing their job very well during the past few years…they should have been policing the industry more closely. Too bad Toyota is the company that has to pay the price for NHTSA’s incompetent ways, but it had to happen to someone, right? I hope you can agree there’s not a lot of fairness in this fact, but I’ll certainly admit that life is never fair.
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I think, by the way, that we’re saying mostly the same thing in terms of the politics behind this fine. POLITICALLY, there’s a lot of pressure on NHTSA to do something drastic. The difference in our perspectives is that you’re assuming this is just politics as usual, while I’m thinking there is a pro-union agenda at work. I think that – provided I’m understanding you correctly – we’re both right. Toyota is getting the hammer here because NHTSA is trying to look like they actually do their jobs, and no one in the administration is too concerned that Toyota is getting nailed because they need union votes in the mid-term elections.
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As for emails alleging that NHTSA has been looking into acceleration complaints since 03′, I don’t think that’s really new. State Farm issued a statement a few months ago with a lot of that info. I know it’s likely you’ll never agree, but complaints aren’t necessarily evidence of a problem. As I’ve said before, most of the time people are just stepping on the wrong pedal.
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NPR did a study comparing the number complaints to the number of cars sold, and interestingly enough VW-Audi had more complaints per 100k vehicles sold than Toyota in 08′ and 09′, Suzuki and Jaguar had more than Toyota in 07′, all three had more complaints than Toyota in 06′, etc. If you look at the number of complaints per 100k vehicles, Toyota has NEVER led the industry during the last 10 years. As ‘bad’ as Toyota’s unintended acceleration problems might be, VW-Audi, Suzuki, Jaguar, Mazda, Subaru, Land Rover, and Honda-Acura have all had years with a lot of complaints. http://www.npr.org/templates/s.....=124235858 This is why I keep saying that all these complaints are meaningless without evidence of a problem.
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Mickey – I think you’ve hit the nail on the head. If NHTSA wants to fine Toyota the max, I guess that’s their perogative. However, what’s the justification for publicizing the fine when they didn’t do that previously? Politics.
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tmac – Word.
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Rich – Good point about the fact that consistency isn’t required when it comes to determining the amount of a fine. The point I was trying to make is that political influence is the most likely explanation for the tremendous difference in the way NHTSA handled GM’s fine in 05′ and Toyota’s fine today. This is definitely CYA in action, but the idealist in me would appreciate a little more consistency when our government interacts with the private sector.
Justin – By the way, that link to the Indy Star is great evidence of one of Toyota’s biggest problems – every decision is made in Japan. Even IF Toyota wasn’t acting maliciously when they decided to delay their recall (and I say “if”), the culture in Japan emphasizes getting it right before going public…and that’s not the right way to do things. Toyota is an international company managed like a national one, and until that changes major PR problems will continue.
Jason-I wouldnt put a lot of emphasis on the press release. I know recently several agencies under the DOT decided to have press releases for a certain amount on the CP. With as much attention on Toyota the press would have used a FOIA to get the CP amount. The issue that still bothers me about these accelerators is no duplication. Rust on brake lines is traceable. Inadvertent air bag deployment is visual. NHTSA and most govt agencies are technicologically behind the civilian sector. Their budgets dont allow it! Collected CP’s go into the general fund due to conflict of interest. With all of this said, what substantiates the $16 mil CP…failure to timely make a recall on something you cant duplicate????? Just maybe NHTSA was doing their job until the politicians and media got involved. One thing is for sure, the $16 mil notice of civil penalty was made at the DC HQ level and Toyota will have their day in court!
Justin,
It’s entirely political. When there are sock puppets all over demanding that Akio Toyoda commit seppuku, calling these things “death mobiles”, when we all know that the UAW helped Obama get elected, when we all know that the UAW owns 17.5% of GM, when we know that GM got a huge taxpayer sponsored bailout, when we know that LaHood and Obama are from the same state, when we know that LaHood has relatively no experience related to his job;
it looks to me that this is totally politics.
What sickens me though, I’m not one who gets into social issues; however this “culture problem” is racism being egged on under the leadership of a race baiter.
I like Toyotas. But what disturbed me the most about this is the abuse of power and ample thuggery by our government. I didn’t vote for this!
As a taxpayer and a voter, I don’t approve of how our country’s law makers handled this.
Toyota will think twice next time before opening another plant and hiring Americans again. My apologies to Akio Toyoda.
Rich – Thanks for making that point – failing to recall a mysterious problem is different than failing to recall an obvious one. I’m not sure if you’ve seen it, but there’s pretty damning evidence that Toyota execs in Japan wanted to wait and keep this problem secret until they had a fix ready. I understand *why* they would do that, but it’s clearly the wrong choice. If NHTSA knew about the emails between Jim Miller and Japan before the rest of us, I think I understand why they went to the max. Still, it bugs me that the head of the DOT makes a habit of threatening Toyota. He shouldn’t ever go there.
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sp – It’s interesting to think about what many Americans would do if GM was treated this way by the Japanese government.
2nd helpings anyone?
http://www.cnbc.com/id/36402382
Just reading Lahood’s comments stating the fine isn’t enough. That there is more than enough proof, Justin that it’s political and Lahood is making it personal also.
Toyota has made some stupid moves and mistakes in this chain of events, but there’s not denying the political capital that comes with tearing down a successful icon in American culture. If only Toyota had acted a little quicker…