By on May 11, 2010

Talk about timing: While Trans Sec LaHood was in Japan yesterday, ostensibly to look a trainsets, while he toured Toyota instead and uttered dark “time will tell” threats, while he said that his people are still working on the evidence for a second $16.4m federal fine, back in Washington, the timer was set for yet another ticking 16.4 mega-tonne bomb.

The DOT said Monday it will launch an investigation into whether Toyota Motor Corp. waited too long before recalling its T100 pickup truck in the U.S. , reports The Nikkei [sub]. The 6 year old case could cost Toyota the third $16.4m fine. Soon, we’ll be talking about real money.

The allegations: In 2004, Toyota recalled the truck, known as Hilux Surf, in Japan. Steering rods were subject to fatigue, cracks and breaks. In the U.S., the truck wasn’t recalled. Toyota said it was an issue isolated to trucks sold in Japan. A year later, the truck was recalled in the U.S.

Now, NHTSA said Monday that Toyota may have received similar complaints about the T100 truck from U.S. customers in 2004.

Under the TREAD act, NHTSA must be informed about defects within five business days after learning about them. Says The Nikkei: “If the latest probe determines Toyota broke this rule in 2004, the Japanese automaker is likely to be penalized with a new fine.”

It is unclear whether the third fine was mentioned yesterday during the meeting. The second was. Apart from that, LaHood said he and Akio Toyoda had a “candid, frank and serious discussion.” Which is diplomatic double-speak for yelling at each other.

When the U.S. threatened new sanctions against North Korea back in 2003, the talks were “positive, frank and candid.” That was one step below “candid, frank and serious.”

Toyota was the first manufacturer to be hit with the maximum penalty. Assuming non-discriminatorial treatment, other auto maker better start building reserves in case the serial fines set a precedent.

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25 Comments on “The Shakedown Continues: Toyota Could Cough Up Another $16.4 mil Over 6 Year Old Truck...”


  • avatar
    Robert.Walter

    “Sins of the father” and all that…

    TMC deserves to get hammered for this … it was a wonder that they were able to skate on this issue for so long … at the time this was going on, I was wondering what was wrong with Toyota and NHTSA that this defect was being talked about and talked about but there was no move to recall in the US even though action had been taken in other markets … the delay in the US cost (IIRC) the life of at least one person (IIRC, a boy who’s 4-Runner broke the steering rod, flipped over and killed him, a good 6-months after the vehicles had been recalled in Japan … and while TMC-US was still “studying the issue”…)

  • avatar
    don1967

    I would not place this in the same category of “shakedown” as the 80-year-old who steps on the wrong pedal in his Prius and seeks millions. Toyota, it appears, deserves this one.

    That said, lining the pockets of Big Brother is never a good thing. Government intervention should be limited to establishing the facts, recovering the cost of its investigation, and ordering Toyota to settle claims with people who have actually incurred a loss.

  • avatar

    Could someone please tell me which other manufacturer has been hit with the maximum penalty, let alone with (possibly) three times the maximum penalty in a row?

    • 0 avatar
      Accazdatch

      I have nothing but hatred for anything from Toyota — as well as those who buy Toyota.

      I have similar feels from those who buy GM and Chrapsler.

      Now with that said..
      Toyota DESERVES every [BLEEP] [BLEEP] of it.

      Every SINGLE [BLEEP][BLEEP][BLEEP] bit of it.

      But..
      It would only make me happier.. if they admitted their faults on some live TV special that got to the nations of beige driving Camry or GX / 4 Runner / Taco / Tundra or Corolla framed vehicles…

      And properly SUFFER the harsh judgement by those who deserve to know.. just how bad the vehicle is.

      And it doesnt matter how its been drivin or how long its been used..

      Sometimes.. a nice [BLEEP] fat LAWSUIT in U.S Supreme Court with the title [BLEEP] splashed all over the papers.. could only humiliate Mr Toyoda enough.

      Cause the 16.4mi isnt enough, not when the [BLEEP] lemmings buy the same cars.

      Ford still pays for the issues with the Exploder.

      GM is going to be paying out with the Truck gas tank issues.

  • avatar
    john.fritz

    How do these fines benefit the consumer? The consumer who pays them, by the way.

    • 0 avatar
      NulloModo

      These fines don’t benefit anyone, except perhaps the NHSTA who gets to look tough.

      The fines are way too small to provide any kind of meaningful deterrent for Toyota to not do something like this again. All three fines together are less than 2% of Toyota’s rumored profit for this quarter alone.

      If we want to get tough, and benefit both consumers and the domestic auto industry, Toyota needs to be fined in the billions, not millions.

    • 0 avatar
      Robert.Walter

      Sorry Nullo, I beg to strongly differ…

      Start with knowing that the fines are not for the defects themselves, but for not properly reporting them to NHTSA within the deadlines required by law (5 days).

      Appropriately-scaled fines do benefit the consumer, lack of fines and accountability lead to companies that institutionally hide their defects and blame the operators for their own deaths (as did Mitsubishi in the late 90′s-early’00′s before being famously busted at least 2, possibly, 3 times before cleaning-up their act.)

      Bear in mind, the relief available to singular, multiple, or class-action plaintiffs under Tort Law (damages & punative damages) also provides a measure of balance to encourage responsible OEM behavior.

      I’m of the opinion, that if a Toyota, the paragon of virtuous-cycular continuous-improvement behaviour can exhibit such either a) disorganized and amatuer, or b) institutionalized self-interested anti-social behavior despite the cumulative costs and risks(monitary and reputational) associated with a) recall publicity, b) remediation costs, c) legal costs, d) settlements and judgements, e) statutory fines, can still exhibit sluggishness (at best) and willful delay and obstruction (at worst) as it has now well demonstrated itself to have done, then the fines allowed for in the statues are inadequate to the task they are designed to perform (i.e. pro-active compliance by OEMs) and need to be scaled-up accordingly.

      What is the cost to the consumer? If the OEM performs its duties appropriately, there is no cost to the consumer because there is no fine. Conversely, if there is no fine, but a defect occurs which the OEM promptly deals with, there is a net benefit to the consumer of having a non-compliance/safety item corrected promptly.

      I’ll go further: if the OEM a) reduces and/or b) promptly corrects safety defects, then there will be fewer PPD or PI suits brought against the OEM, and this will lower the OEM’s cost of defending and/or settling a suit (as well as avoiding the costs associated with the other points outlined in a-e above. This is another direct net benefit to the consumer and the OEM’s shareholder owners. This is a win-win.

      It could very well be that the lack of appropriate maximum fines in the past, coupled with cosy NHTSA-OEM (NHTSA revolving door) relationships, and NHTSA under-staffing led to a creeping sense that recalls could be “managed-away”…

      Perhaps it sounds like the above is written by a pro-litigation type lawyer, but actually, I have been an engineer of automotive engine and chassis safety components for over 25 years…

      p.s. In the case of the Tracking-bar Fracture Falure Defect, given the great reputation TMC had for product quality, and the comfy relationship TMC enjoyed with NHTSA, and given that this component was changed in production and subject to a field campaing in other markets, one has to wonder what the motivation was for TMC to sit on the topic for so long before finally getting a wiggle-on and taking the same steps in the US market…

    • 0 avatar
      John Horner

      The fines set up the consumers who were harmed to recover individual damages through civil actions against Toyota.

  • avatar
    Stingray

    And this is the company we all in the industry should see as paradigm of quality and well doing *rolleyes*

  • avatar
    PeriSoft

    I demand a full writeup on whatever the hell that thing in the photo is.

  • avatar
    georgie

    Shakedown is right!!!

  • avatar
    wsn

    If GM/Ford/Chrysler are subjected to the same level of scrutiny, they would have been fined out of existence a long time ago.

    Does Toyota deserve this fine, knowing that it did break the rule? Actually no. Because this rule isn’t fairly administered.

    Let’s say, a grade 5 student didn’t complete his homework and by the school rule, he should write on a piece of paper “I will do my homework” 100 times. OK, you say, if that’s the rule, just do it so that he will remember. But what if I tell you that no student in the class did the homework and your kid was singled out by the teacher? Would you still say your kid deserved it?

    • 0 avatar
      Robert.Walter

      Please remember, this rule has to do with reporting that you have recallable issue; for this there is a 5-day limit. In what case, have any of the domestic oem’s demonstrated that they have not done this, or, as in TMC’s case, repeatedly not done this?

      I understand the power of precedent, but it should not be abused to the extent that any lax application of the rules in the past means that the proper use of the rules can never be applied in the future.

    • 0 avatar
      wsn

      Oh yeah? Are you telling me that all 200+ fatalities caused by Ford Exploders happened in a short span of 5 days?

      Did the Toyota truck even kill a single driver due to this defect?

  • avatar
    John Horner

    Another take on this:

    Toyota had a long running practice of hiding information from customers, the government and just about anyone else outside Fortress Toyota. For eight years an extraordinarily corporation friendly US administration looked the other way and ignored legal reporting requirements in order to “keep the government off the backs of free enterprise”. Now there is a new US government and many of those old see no evil policies are coming in for strong review.

    Mr. Schmitt’s piece completely avoids the question of why Toyota recalled a vehicle for defects in Japan while pretending for one year that the very same parts on the same vehicles were somehow not defective once shipped across the Pacific Ocean.

  • avatar
    George B

    Bertel, I’m not clear on the exact connection between the Japanese market Hilux Surf and the US market T100. Isn’t the Hilux Surf a SUV like the 4Runner and the T100 a not quite full sized pickup truck? Do they use the same exact steering parts? Toyota should have be more proactive, but does a problem Japan have anything to do with a TREAD act violation on a different vehicle in the US market?

    • 0 avatar
      Robert.Walter

      Under TREAD, every OEM is obliged to report each of its overseas recalls to NHTSA along with an explanation why a similar recall is not appropriate for the US (acceptable answers are things like a) car not sold in US, b) different design for US, c) different process for US, d) different supplier for US.

      The reason for this was that in the case of the Explorer, the early failures of the Firestone tires and related roll-overs and deaths, occurred in far-away places like Venezuela and the middle-east. Had Ford been obliged to report these to NHTSA, a whole lotta property damage, personal injuries and deaths could have been avoided.

      In the case of my company, we went through a major action to assess if there were any TREAD compliance issues at the subsidiary level and the no (or detailed yes answers) were collated at the corporate level for submission to each of our OEM customers.

      Toyota is subject to and participates in the TREAD regime (I’ve seen the “does not apply” letters to NHTSA. In the case of the Steering Track Bar, I don’t know if they submitted such a letter to NHTSA (this may be the cause of the current discussion of Toyota’s earlier non-compliance.)

      Toyota’s issue came-up well after TREAD was enacted (ca. 2000-1), so there should be no excuse if they hadn’t properly reported it.

    • 0 avatar

      George: According to The Nikkei, “the U.S. Transportation Department’s auto-safety regulator said Monday it will launch an investigation into whether Toyota Motor Corp. (7203) waited too long before recalling its T100 pickup truck in the U.S. in 2005. In 2004, Toyota recalled the model in Japan, where the truck is known as the Hilux Surf…”

    • 0 avatar

      Robert: The TREAD act was triggered by the Ford Explorer / Firestone debacle. Someone must have thought long and hard to come up with “Transportation Recall Enhancement, Accountability and Documentation act” so that the acronym would remind everybody of the tires.

      From back when, I recall that there were criminal liabilities for violations, and I recall preparing PowerPoint presentations that showed people behind bars (the steel kind) to shock VW executives into compliance. Why aren’t people thrown in jail?

    • 0 avatar
      Robert.Walter

      Hi Bertel! I remember making the same kinds of ppt presentations around that time too … I’m not sure why there aren’t discussions of criminal penaltys too … I have not been actively involved in the evolution of TREAD for the past 5 years or so, but I recall hearing that the flood of compliance information coming into NHTSA was swamping the organization … could it be that the legislation was dialled back, or that GWB, Nicole Nason and company backed-off from enforcing TREAD?

    • 0 avatar
      psarhjinian

      Why aren’t people thrown in jail?

      Professional courtesy.

      Tin-foil hat answer: because the same people who do the regulation are, quite often, the same people who are being regulated. Or at least they might be in the future or were in the past. It doesn’t have to be the result of malice, either: sometimes it’s simply myopia, in that intra-industry regulators can’t extricate themselves sufficiently to understand the severity of a problem.

      This is very, very common. Lawyers, doctors, police, accountants, directors: it’s a “feature” of self-regulation, and why it’s important for any industry’s regulation to be independent and, for preference, at least partly “civilian”. You need that outsider’s perspective.

    • 0 avatar

      The level of information definitely swamped them and was definitely dialed back.

      A standard sentence in my PowerPoints was “If one of our cars is involved in an accident in Timbuktu, we have to report it. It could have been the brakes.”

      That was definitely reduced. As for the criminal part, I also stopped following TREAD a while ago. Too TREADful …..

  • avatar
    mikey

    Similar to most criminals/con men, Toyotas most serious mistake,was being caught.

    • 0 avatar
      Robert.Walter

      Non-complince is a slippery-slope …

      What works well at a very subtle level, becomes the temptation to expand and deepen the behaviour (often on a sub-liminal level) in order to get the same result (here non-recall w/o penalty), problem is that over-time, the practice a) expands/deepens among the few who practice it, and b) it has a corrosive effect on the rest of the organization as it moves from a smaller practice to an instutionalized one. In some cases as the mind-set takes hold, the act of non-compliance expands outside the original functional area to infect the mind-set of other parts of the organization.

  • avatar
    Odomeater

    I’m sure they profited far more than the fine while knowingly selling dangerous and inferior products to the consumer. So, pay up and stop bitchin.


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