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ON TOYOTA'S RECORD $16.4 MILLION U.S. PENALTY

This article is from our archives and has not been updated and integrated with our "new" site yet... Even so, it's still awesome - so keep reading!

Published on Tue, Apr 6, 2010

By: The LACar Editorial Staff

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News of NHTSA’s $16.4 million fine on Toyota hits at time when there is a growing sense that the worst of their recall storm has passed and now we’re on a slow, but expensive road to partial recovery. Perhaps a better description is that we have just been lived through the proverbial calm ‘eye of the storm,’ and the next wave of storm clouds are yet to come? There is so much at play here, it makes us dizzy when trying to anticipate Toyota’s next move. Do they appeal NHTSA’s judgment? If so, chances are good that the story will play out in headlines across the U.S. in the days to come and further damage Toyota’s already bruised reputation. Do they pay the fine in an attempt to move on and take their public punishment? While a wealthy company like Toyota can surely afford this fine, even when it is the largest ever levied against a car maker by NHTSA, the growing legions of class-action lawyers will stand a bit taller and bolder as they could point in court to such a NHTSA payment as an ‘admission of guilt,’ and therefore could become much more expensive for Toyota and others in the long run. And a point that few will address and we cannot help but ponder is Toyota’s somewhat tenuous working relationship with the U.S. Government, especially the Obama Administration. Concerns were reported a few weeks ago that the decades of success by Toyota in the U.S. were at the expense of GM and Chrysler, two companies now partially owned by the government. While a coordinated campaign against Toyota, fueled and run by the U.S. government, are nothing but far-fetched ideas from conspiracy theorists, the steep fines now being imposed only have those theorists awaiting a response. The most amazing element is that this chapter of the Toyota story comes as we wait for Toyota’s next move in the incentive game with Honda, GM, Ford and the rest of the industry. Thanks to their zero percent financing programs, deep stacks of cash on the hood, special low lease rates plus two years of free maintenance for existing Toyota owners, the industry in general was just finally showing spring-like signs of growth. Toyota may have passed through ‘the eye’ and back into the storm. - James Bell, executive market analyst, Kelley Blue Book

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