Toyota Hid Pedal Defect, Violating Law, U.S. Says

Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world’s largest automaker of breaking the law, Bloomberg reported.

Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended yesterday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals.

The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March, signaling the company may be recovering from global recalls of more than 8 million vehicles. Toyota waited at least four months before telling U.S. regulators that gas pedals might stick, LaHood said in a statement yesterday. Companies have five business days to report safety defects, the Transportation Department said.

The department’s action showed “safety matters and they’re going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That’s very appropriate. They caught Toyota red- handed.”

The Toyota City, Japan-based carmaker’s American depositary receipts, each equal to two ordinary shares, fell 42 cents to $80.84 at 4:02 p.m. in New York Stock Exchange composite trading. They have declined 3.9 percent this year.

“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”

The U.S. investigation and review of documents provided by Toyota is continuing and may discover additional safety violations that lead to more penalties, LaHood said today at a news conference at Chicago’s O’Hare International Airport.

“This is the first thing that we have found,” he said of the delayed disclosure about sticky pedals. “It may not be the last thing.”

Toyota received a letter from NHTSA yesterday asking for the fine, Mieko Iwasaki, a Tokyo-based spokeswoman for the carmaker, said by phone today.

“We are considering how to respond to it,” Iwasaki said. “Toyota is working toward making safe, reliable and high- quality cars to satisfy our customers and responding sincerely to customers’ comments.”