WASHINGTON, DC (WUSA) -- The government says Toyota knew about problems with sticky gas pedals at least for months before recalling 2.3 million vehicles over safety concerns.
And, that violates a law which requires an automaker to alert the National Highway Traffic Safety Administration about safety defect within five business days.
Transportation Secretary Ray LaHood says that decision put consumers at risk.
The penalty is the most the government could seek. But it does not address a bigger issue that has caused several fatal accidents, and lead to the recall of 5.4 million vehicles, those jamming floor mats.
The once dominant automaker now faces an identity crisis even as sales have soared thanks to discounts and incentives.
Toyota says it signed off on the agreement to avoid a long court battle.
But, as some consumers and insurance companies, like State Farm, gear up for a legal fight anyway, the car company may end up paying much more than just the equivalent of $2 for every vehicle it sold worldwide last year.
"Even though they are not saying they did anything wrong, paying $16.4 million, the largest fine ever accessed by the United States Department of Transportation, that speaks loud and clear," says attorney Pil Zipin.
The plaintiff's attorney says although the car company has agreed to pay the penalty, they still face major glitches down the road.
"They have to deal with these issues of what did they know. When did they know. WHat did they disclose. What did they withheld," he says.
Toyota says they did not try to hide a safety defect. The agreement still leaves the door open for the government to assess other civil and criminal penalties and fines.
And, Toyota's troubles may not end now. They just announced its recalled 2010 Lexux GX 460 SUV to deal with a rollover problem.
Consumer Reports found the potential problem when it conducted test on the luxury vehicle, and rated it a "don't buy safety risk." The consumer non-profit has not given that designation to a car since 2001.
Toyota sold about 9,400 Lexus GX 460 SUVs since late December of last year. The car company says a software update should fix the problem.