I wrote in May about how car makers - through the Alliance of Automobile Manufacturers - were lobbying against a bill designed to make NHTSA stronger and vehicles safer.
Christopher Jensen at The New York Times wrote yesterday that additional consumer groups had joined to criticize automakers for their continued opposition to the auto safety bill. According to Jensen's report, the following groups have joined to urge Congress to pass the Motor Vehicle Safety Act of 2010:
Both the Alliance of Automobile Manufacturers and the Association of International Automobile Manufacturers have opposed the safety bill. Car makers want to remove a provision that would allow fines of up to $300 million for failing to promptly notifying NHTSA about a safety problem. The top fine under currently law stands at $16.4 million, which Toyota was required to pay recently for failing to notify safety regulators about its "sticky" pedal acceleration defect.
Even in these dire economic times, Ford Motor Company announced a 2.1 billion quarterly profit in April 2010. The current maximum fine represents less than 1% of what Ford earned as profit in just the first three months of this year. For a fine to have any effect, it must effectively persuade compliance.
Car companies also oppose a $3 fee for each vehicle sold. (The fee would rise to $6 in the second year and $9 in the third). The fee would fund expansion of NHTSA's work and improve NHTSA's oversight and safety protection capabilities.
Is $3 (or even $9) really too much to ask in order to improve the safety of the vehicles we drive every day? On a $30,000 new car, $3 amounts to 0.01% (0.0001) of the cost of the vehicle. The maximum fee amount to 0.03% (0.0003). In a world where aftermarket "rust protection" costs hundreds of dollars and dealers routinely charge "delivery charges" of several hundred dollars, why is the industry so concerned about $3.00? It seems like a small price to pay for better safety.
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I really don't think the automakers primary concern is some $3 fee. Analyzing cost\profit percentages is a pointless exercise. One could use the same bizarre logic to argue, "Why doesn't McDonald's give away all Big Macs - after all, a Big Mac is only $3 and McDonald's earns billions!" See how silly?What ELSE is in the bill that may cost the automakers millions? Those are the things we should analyze cost vs. benefit.The fact is, automakers have always opposed any and all safety legislation - seat belts, airbags, roof standards, you name it. Nothing new here.
RJ,I think you are probably right. The $3.00 fee is likely not the "main" reason automakers are fighting against this bill, but it is a stated reason.The main issue for car makers is likely the increase in the maximum fine for hiding or delaying a safety recall. Right now, the maximum a car maker can be fined is just $16.4 million (with annual adjustments for inflation). As I pointed out above, that number amounts to pocket change for these manufacturers and has little or no affect on their safety decisions.However, the new bill adds teeth -- with the maximum fine increasing to $300 million. That's a number that will get car makers' attention.The other main issue is better oversight by safety inspectors and less reliance on the industry to police itself. Did you know that the government doesn't actually test vehicles to ensure compliance with the minimum safety standards (FMVSS)? The auto makers do their own testing and submit their own certification. A manufacturer can run 10 tests, fail 9 of them and certify compliance with FMVSS based on the single passing test. In many instances, the car maker doesn't run any test at all. It simply certifies compliance based on "engineering judgment." Let's hope the new bill ends these practices and starts holding car makers accountable for safety violations.Thanks for reading and taking the time to comment.
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