U.S. Car Makers Feeling Pressure Associated with Auto Defects

Car companies recalled more vehicles in the U.S. through the end of July this year than at any other time except 2014. The number of recalls for the time period surpasses annual totals over the past 50 years with the exception of 2014; during the first seven months of 2014, a total of 49 million vehicles were recalled by auto makers. Car manufacturers recalled a total of 34.5 million vehicles during the first seven months of 2015. Problems causing the recalls ranged from vulnerabilities to hackers, air bags that were prone to rupturing, as well as potential fire hazards.

The recalls come during a time when safety regulators are under increased scrutiny which is leading to safety crackdowns in the auto industry. The trend is leading to increased oversight and recalls. In addition, the number of recalls is also impacted by close to 12 car manufacturers recalling approximately 14 million vehicles as part of the larger 32 million car recall for faulty air bags manufactured by Takata Corporation. The air bag recall is the largest in U.S. history.

A recent government audit from earlier in the year found that regulators relied too heavily on car makers to report safety concerns. The relaxed treatment culminated in a failure to identify faulty ignition switches that has allegedly resulted in more than 120 deaths associated with one car manufacturer.

One automaker commented on the changes following a sweeping settlement with regulators related to approximately 11 million vehicles. The automaker received multiple $35 million penalties for three safety lapses, including misleading and obstructing investigators; inadequate and lagging repairs; and failing to timely notify vehicle owners concerning recalls. An independent monitor and vehicle repurchasing is also required by the settlement. Regulators may soon see the approval of $105 million maximum penalties. More automakers are receiving penalties and recalling vehicles.

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