Automakers Could Face $300M Fines for Failing to Recall Defective Cars

Fines on automakers that fail to recall defective cars would rise almost 10-fold in the U.S. to as much as $300 million per violation under a Transportation Department proposal unveiled today.

The legislative proposal submitted to Congress fills in the details of President Barack Obama’s four-year, $302 billion plan to fund highway construction and set transportation policy.

The National Highway Traffic Safety Administration’s ability to police the auto industry has been a theme of congressional hearings into General Motors Co.’s recall of 2.59 million cars to fix a deadly ignition-switch defect.

“This is something we feel very strongly about,” Transportation Secretary Anthony Foxx said on a conference call with reporters today. “We do feel like the penalties could be set higher to ensure when a violation occurs it is more than a rounding error.”

Another recall-related provision of the proposed legislation would give the federal government new authority to require removal of the cars when a defect is first discovered, said David Friedman, the acting administrator for NHTSA. A third requires rental car companies to comply with recalls.

As the top regulator of the auto industry, NHTSA must hold manufacturers accountable for defect and compliance issues, Friedman said.