U.S. Seeks Bigger Fines in Effort to Reduce Defective Vehicles

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Despite carmakers efforts to flag problems and eliminate use of defective parts, the U.S. auto safety regulators in the Obama administration believe that bigger fines are in order. Elimination of production of defective vehicles is the ultimate goal for all concerned parties. Since the 2010 Toyota crisis involving defective parts, calls for stronger regulations and fines are seen by many as the best solution. Auto manufacturers have stepped up to this problem with more diligent self-reporting of defects and recalls to help increase consumer awareness of potential defective products.

Persons who have been in car accidents involving a defective vehicle can receive injuries that are devastating. When a person gets into a vehicle, they expect the vehicle to operate safely and to arrive at their destination unharmed. Vehicle accidents caused by auto part failures can result in life-changing or life-ending physical harm. The result is millions of dollars in damages when class action lawsuits are filed following discovery of defects in vehicle production, especially if it is disclosed that a manufacturer of the vehicle or its parts was aware of a problem and failed to notify the public or government agencies.

Currently the maximum fine for failing to publically disclose known defects is $17 million per instance, a figure viewed as inadequate by administrators of the National Highway Traffic Safety Administration (NHTSA.) The government feels that higher fines are needed to convince businesses to voluntarily comply with safety disclosure regulations. The target penalty of new legislation approved in the Senate raises the fine maximum to $250 million.

Automakers are against the bill calling for higher fines. The manufacturers side with House representatives who assert that higher punitive regulations would hinder the industry's recent recovery. Members of the House who are against this bill differ in opinions and say that the better way to improve vehicle safety is through more reasonable incentives.

Source: Reuters.com, "Carmakers flag problems, but U.S. seeks bigger fines," John Crawley, Mar 22, 2012