DETROIT (April 13, 2010) — The National Highway Traffic Safety Administration (NHTSA) made the right call in recommending that the maximum civil penalty be imposed on Toyota Motor Corp. for not reporting in a timely manner a problem with accelerator pedals that may stick.
It is wrong to play fast and loose with the processes created to protect American consumers.
Unlike many other nations, the U.S. has a safety system built on voluntary compliance under which auto makers are honor-bound to report safety defects to NHTSA within five business days. Toyota violated that sacred trust and deserves the penalty.
While the Toyota penalty recommendation shows the system working, it also exposes some areas that need buttressing.
- NHTSA needs updating with broader day-to-day interaction overseas. The safety agency was established in 1970 to oversee what was then a national industry, not today's global industry in which vehicles are designed, sourced, produced and sold in many markets.
Toyota's tone-deafness to the importance of safety issues and its insular Japanese decision-making—exemplified by the inability of Toyota executives in the U.S. to use their own initiative to address the acceleration problem—show the need for better global reach. NHTSA must be informed of all problems reported to overseas regulators, not just recalls, as required by the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act.
- NHTSA needs more personnel. The lingering questions about the possible role of electronics in the cases of unintended acceleration in Toyotas—and NHTSA's reliance on the expertise of NASA and the National Academy of Sciences—demonstrate the need for more electronics engineers.
- Congress should increase the maximum penalty for violations to a meaningful level that carries some sting. Hiding safety defects deserves more than a slap on the wrist. The $16.4 million fine—while the maximum allowed and the highest ever recommended—is pocket change for Toyota.
Toyota can hardly plead poverty, even though it could report an operating loss in the current fiscal year. The company was estimated to have $28 billion in cash as of Sept. 30, 2009; and with its stock trading above $80 a share last week, the auto maker had a market cap of about $126 billion.
For the U.S. system of voluntary compliance to work, auto makers and suppliers must know that hiding safety defects will not be tolerated.
This editorial appeared in Automotive News, a Detroit-based sister publication of Tire Business.