Automaker recall fines hiked to $35 mil in compromise

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The untimely recall of some Toyota Lexus models spurred the Senate to ask for increased penalties. Image: David Villarreal Fernandez/Flickr/CC BY-SA

The fines charged to automakers for failing to conduct timely recalls of unsafe models had been doubled to $35 million in a compromise bill agreed on by the House and Congress last week.  The Senate originally asked those penalties to be upped to $250 million.

Recall fines

The current maximum the government can charge for failure to issue a timely recall is around $17 million. These fines are rarely levied, however. In February, BMW was charged $3 million for failing to issue a recall within the five day window the National Highway Traffic Safety Administration requires.

More compromises

Other compromises were also made. The Senate also asked for — and lost — mandates for brake overrides, push-button ignitions and event data recorders, among other things. If it had gotten its way, the Senate would also have banned any kind of visual entertainment within the driver’s view.

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The National Highway Traffic Safety Administration did gain more authority over imports than it has wielded in the past. Again, however, the Senate had requested much more. A provision addressing the financial responsibility of auto importers was struck down.

Many will be glad to know that the compromise bill upheld forbidding states to use Transportation Department grants to acquire profit-making light and speed cameras.

Toyota recalls drive increase

The provision for increased penalties arose from Toyota’s paying $48.8 million to the government for delaying three costly recalls over unintended acceleration issues. Some say the past penalty caps are less costly than some recalls, and therefore not a deterrent for automakers.

Toyota continues to be plagued with recalls for unintended accelerations. Just last week an additional 154,000 Toyota Lexus models were added to the recall effort.

Automakers support compromise

Mitch Bainwol, CEO of the Alliance of Automobile Manufacturers — a trade association representing Chrysler, GM, Ford, Toyota, Volkswagen and seven other automakers — supported the compromise; in essence, he said that automakers can be trusted to put safety first.

“While traffic fatalities are at historic lows, automakers are committed to continuously improving motor vehicle safety.”

Another trade group, Global Automakers, also gave its support to the watered-down version of the legislation. The group represents Asian automakers such as Honda, Hyundai and Nissan.

Although the compromise bill does double the maximum penalties, automakers see the compromise as a victory in light of the level of reforms requested by the Senate.

Larger transportation bill

The fines and other safety issues were part of a larger transportation bill involving the funding of transportation programs. Some funding provisions were due to expire on Saturday, putting lawmakers on a tight deadline.

The new penalties will take effect within the next twelve months.

Sources

Detroit News
Global Automakers
Businessweek

 

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