Regulators Seeking Greater Power Over Automakers After Mass Recalls in 2014


The National Highway Traffic Safety Administration will gain the power to order a freeze on the sale of defective cars if Congress passes the transportation funding bill the White House sent to it earlier this week. Auto manufacturers would have to immediately cease sales of cars determined by the regulator to pose “an immediate likelihood of death or serious injury to the public.”

 

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The stop-sale proposal, contained in an “imminent hazard authority” clause of the $478 billion, six-year plan, is just one of several reforms the NHTSA is seeking after a record number of safety-related recalls in 2014. Under the bill, both new and used car dealers would also be required to check their inventory for any vehicles with open recalls prior to sale.

 

The NHTSA says that the power to stop sales would protect consumers while auto manufacturers and regulators investigate issues. Currently, auto manufacturers can challenge NHTSA allegations of defects and delay any fixes until after sometimes-lengthy court battles. Since mechanical failure contributes to 12% to 13% of total auto accidents, there is a significant safety concern.

 

The U.S. regulator is also attempting to increase the maximum fines for failing to comply with recall orders from $35 million to $300 million.

 

The last time the regulatory body sought to lift a cap on penalties, in 2010, the measure was struck down after automakers, dealers and trade groups spent approximately $40 million on congressional lobbying. It is likely that the new bill will also face strong opposition despite the public attention brought to the issue in 2014.

 

Early in March, an NHTSA review found that among the 2014 recalls were two of the biggest in U.S. history: General Motors recalled 5.88 million vehicles in the U.S. over potentially faulty ignition switches, and Honda recalled 5.39 million U.S. vehicles over potentially defective airbags made by Takata.

 

Honda’s recalls related to the Takata airbags have continued since, with the latest round announced as recently as March 20. Altogether, Takata airbags have been the cause of recalls for 17 million vehicles from 10 separate automakers.


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