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Failure to Recall May Cost Makers $300 Million

Feds propose raising top-end find nearly tenfold.

by on Apr.30, 2014

Transportation Secretary Anthony Foxx wants to raise the maximum fine against automakers failing to meet recall rules to $300 million.

Transportation Secretary Anthony Foxx wants automakers to know his department means business with his latest proposal that would raise the maximum fine for not recalling a vehicle in a timely manner nearly tenfold.

As part of the administration’s transportation reauthorization proposal, Foxx proposed making the top fine $300 million, up from the current cap of $35 million. The department doubled the previous high in 2012 raising it from $17.5 million to current figure of $35 million.

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Foxx believes the current top fine isn’t enough of a deterrent for automakers to not obey the rule requiring companies to issue a recall within five days of determining the vehicles pose a safety risk to drivers.

“Whether traveling by motor vehicle, walking or bicycling, we are committed to ensuring that Americans reach their destinations safely. Our approach will continue to support both safer behavior and safer vehicles to prevent deaths and injuries on our roadways,” said NHTSA Acting Administrator David Friedman, according to the Detroit News.

“As the nation’s top regulator of the automotive industry, we hold manufacturers accountable for defect and compliance issues regarding their products and are seeking to further our ability to do so in the future, including increasing civil penalty limits nearly 10 times to $300 million.”

The request came as part of a larger $302 billion transportation authorization proposal that would implement the new fine structure as well as giving the National Highway Transportation Safety Administration (NHTSA) the power to issue the “park-it-now” order that lawyers and politicians have been clamoring for NHTSA to issue to General Motors for the 2.6 million vehicles it has recalled to over a faulty ignition switch.

The issue has caused 31 accidents and 13 deaths, but the federal safety agency does not currently have the authority to issue the order. With the new powers, NHTSA could force automakers to makers to remove the vehicles from the marketplace if the agency deems them to be dangerous.

(New products drive sharp surge in Daimler earnings. For more, Click Here.)

In 2010, Congress considered legislation that would have given NHTSA the power to order automakers to stop sales and order immediate recalls if it found “an imminent hazard of death or serious injury.” However, it was never passed.

(Click Here to get details on the Terrafugia flying car.)

Right now, NHTSA must go through a two-step process of initial investigation and then engineering analysis before it then must hold an administrative hearing to compel a recall. Then it must go to court to enforce the order. Still, it cannot order the owners of the vehicles to stop driving them.

(To see more about half of American cars getting more than 23 mpg, Click Here.)

GM announced that the replacement ignitions were now rolling off the production lines of its supplier, Delphi Corp., and that dealers should be able to complete the replacements for all of the affected vehicles by the end of October.

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3 Responses to “Failure to Recall May Cost Makers $300 Million”

  1. Jorge M. says:

    Politicians like to grandstand instead of work to improve the system – all at the expense of consumers.

  2. Rulx Registe says:

    I applaude Secretary Foxx in his effort to get car manufacturers to take their obligation seriously, specially when it has to do with someting that can cost humans’ lives. $300 million sounds like a great deterrent to me.

    Thank you Mr. Secretary,

  3. Greg Yager says:

    Don’t worry folks.. The Republicans will kill this idea because it was presented by the Obama administration.