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New Proposal Seeks to Increase Late Recall Fine to $300 Million

Motor Trend logo Motor Trend 4/30/2014 Karla Sanchez

In an effort to get automakers to issue recalls more promptly, Transportation secretary Anthony Foxx wants to raise the maximum civil penalty for violation of U.S. auto safety laws from $35 million to $300 million. In case you're doing the math, that's eight times as much as it is now. Although this sounds rather harsh, Foxx hopes this will urge carmakers to address recalls in a more timely manner.

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This comes in the wake of the GM ignition switch recall, which prompted the National Highway Traffic Safety Administration (NHTSA) to thoroughly investigate whether the automaker properly followed the legal process and requirements for reporting U.S. recalls. Under federal regulations, an automaker must inform the NHTSA of a potential safety problem within five business days after discovering the issue. GM, by its own admission, said it first learned of the issue in 2004 as the 2005 Chevy Cobalt hit dealer lots. The ignition switch recall that affects millions of models worldwide has even been linked to 13 deaths. 2007 Chevrolet Cobalt Coupe SS© Provided by MotorTrend 2007 Chevrolet Cobalt Coupe SS

A stiff penalty could help prevent similar occurrences from happening in the future, and $300 million definitely sounds like a number that will get automakers' attention. If this proposal gets approved, this wouldn't be the first time Congress raised the penalty. With Toyota's unintended acceleration fiasco, the fine was doubled to $35 million, and as a result, the automaker paid more than $66 million in civil penalties. Ford was also slapped with a minimum fine of $17.5 million for the untimely recall of the Ford Escape.

Foxx also proposed barring rental car companies and dealerships from renting or loaning recalled cars that have yet to be repaired. This is all part of a $302 billion transportation plan that would rebuild transportation systems.

Do you think the proposal is a bit too harsh? Is it enough to scare automakers into reporting recalls in a timely manner? Let us know your thoughts in the comments below.

Source: Detroit News, Automotive News (Subscription required), Department of Transportation

GM Ignition Assembly Recall Chevrolet Cobalt Installation© Provided by MotorTrend GM Ignition Assembly Recall Chevrolet Cobalt Installation
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