Federal agencies are taking a more aggressive approach to regulating the U.S. auto industry. There’s merit in that, but the feds’ push will yield better results as it becomes clearer what practices the agencies won’t accept and how it will enforce its rules.
There has been plenty of action on the part of regulators, starting with the much higher fuel economy requirements placed on light vehicles by the 2025 model year.
Last year, the Department of Justice imposed a $1.2 billion penalty on Toyota to settle charges that the company misled the public about its unintended acceleration recalls.
In 2014, the National Highway Traffic Safety Administration hammered General Motors over ignition switch defects. Heavy pressure from NHTSA led to an expanded series of recalls of airbag inflators made by Takata Inc. that now affect more than 30 million vehicles. Last month, NHTSA accused Fiat Chrysler of violations in handling 23 recalls since 2013 and is likely to announce enforcement actions as early as this month.
Meanwhile, the Consumer Financial Protection Bureau clearly is determined to root out what it considers discriminatory practices in auto lending.
And after settling deceptive advertising charges against two Las Vegas dealerships last month, the Federal Trade Commission declared that “protecting consumers in the auto marketplace remains a top priority.”
The feds’ new approach is a big change from decades of largely accommodating industry lobbying. More intense enforcement efforts shouldn’t be a surprise after the size and scope of the Toyota, General Motors and Takata recalls.
But federal agencies must be even-handed in enforcement. They must recognize their own shortcomings. For example, it is wrong to collect $80 million from Ally Financial Inc. to reimburse victims of alleged discrimination and then wait 18 months before starting to look for the victims.
The guiding principle for regulators should be maximum effectiveness: getting the most benefit to consumers from available resources.
Congress is showing less patience with the auto industry and government regulatory agencies, which is understandable. But once reforms are made at the agencies, Congress must financially support the level of enforcement it demands.
Also, automakers must actively cooperate with regulators and not instinctively resist anything that increases costs.
There’s an upside for carmakers that goes with compliance: finding patterns of safety failures before they become widespread and more expensive to remedy.
Frankly, everybody can do better job. That will be easier if both industry and regulators remember the goals: fairer and more transparent auto retailing, safer vehicles and getting more recalled cars fixed.