After a four year investigation, Toyota has been fined $1.2 billion dollars for concealing information about faulty car parts, especially sticky accelerators, while misleading costumers with regards to safety. This fine is the largest ever for a carmaker in the U.S. The company has also had to recall millions of cars, and paid $66 million dollars in civil lawsuits. However, these payments are tiny compared to Toyota's $66 billion in cash reserves.
"There has been a growing sense among executives that a prolonged investigation would ultimately do more damage to the automaker’s image in the United States than a settlement, people with knowledge of the company’s thinking say."
While the investigation has not yet released the number of deaths directly caused by this faulty manufacturing, the fact that the company places more emphasis on avoiding a "prolonged investigation" than on protecting human life seems disturbing.
GM is currently also being investigated; in the wake of this outcome, will the fines be enough to deter other safety violations? Or should the penalties be even harsher?
Full article is here.
2 comments:
The $1.2 billion fine seems stiff but probably good and effective to assure car manufacturers won't continue to cut safety/inspection costs on their new cars.
Toyota and GM's unfortunate oversight seems to be mild form of the "race to the bottom" as all car manufacturers compete against each other to produce more inexpensive yet highly desirable new cars. If these companies like Toyota and GM are cutting production costs at the expense of quality and even safety, it should be the government (or legal system)'s job to step in and fine corporations that cross the line into creating unsafe cars.
My initial impression was that $1.2 billion was a high fine that might possibly cripple Toyota's business, but in the article it mentions Toyota has a $66 billion cash reserve, so it shouldn't be a huge burden on the company.
I think the fine should help prevent companies from cutting corners in the future, if they know they might be fined more than the 'cut corners' were worth.
Personally, I think that the fine could have been higher. There is no excuse for concealing information such as this that could put people's lives at risk, no matter how minor those risks may seem.
I don't know that money will be much of a motivator here. With that much money in the bank, $1.2 billion must seem like nothing.
Maybe publicity is actually what is needed, as bad word on the streets can harm a company's economy more than any fine can. I think a thorough investigation is necessary for this purpose. While settlements increase the efficiency of the system, when it is something as serious as people's lives, efficiency can be put on hold for the sake of transparency.
I think that if thorough investigations were assumed, then perhaps companies would be sure to be honest the first time around.
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