Feds want stiffer fines for recall violations

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Defective cars

The NHTSA wants to raise fines on automakers knowingly selling defective cars. Image: ralphrepo/Flickr/CC BY

The White House wants to impose stiffer penalties for automakers who delay reporting defects to avoid costly recalls. Republicans and automakers say the increased fines are excessive.

Current fines ‘a pittance’

The administrator of the National Traffic safety Administration, David Strickland, said Thursday that the current maximum fine levied against automakers — $17 million — is a “pittance to most of these automakers.”

Strickland, speaking at a House Energy and Commerce subcommittee hearing, said:

“We feel it’s high time the penalties are reflective of the size of the industry.”

Fine increase proposed

Last week the Senate approved a provision to transportation legislation raising penalties to automakers for the first time in more than a decade. The maximum penalty under the approved provision would be $250 million.

Not expected to pass House approval

That provision is not expected to pass House scrutiny, however. Republicans, who control the House, say that the increase is unnecessary and excessive.

Rep. Marsha Blackburn (R-Tenn.), who also serves as the vice-chairman of the House Commerce, Manufacturing and Trade Subcommittee, said more regulation was not the answer:

“We need to think about the best ways to incentivize safety that makes sense and works for everyone.”

Automakers oppose legislation

Automakers are also not happy with the proposal. Mitch Bainwol, CEO of the trade group Alliance of Automobile Manufacturers, said that stiff penalties are not the answer. He said:

“There are plenty of incentives to do the right thing.”

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Past failures in timely reporting

Under the current regulations, automakers are given five days to report any manufacture defects to the NHTSA. In 2010 Toyota was fined for failing to promptly report defects on two occasions. The Japanese car-builder was forced to pay out $32 million.

BMW was also forced to fork over $3 million to the NHTSA following a 2010 probe into untimely recalls that affected 330,000 vehicles.

Last week, Ford came under fire when it was sued by a New Jersey construction company over issues with the lining of the fuel tanks in some vans and pickups. According to the suit, Ford knew about the defect and kept it under wraps. If the court finds for the plaintiff, the suit could lead to an NHTSA investigation into Ford’s reporting habits. And if the NHTSA has its way, Ford could be reaching deep into its pockets.

Tougher stance is effective

The NHTSA has become more aggressive with automakers since the Toyota incident, and the new push is part of that continued effort. Strickland argued that the tougher stance has been effective, since manufacturers have improved their disclosure practices following the Toyota incident.


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