Ford Motor Company is under significant scrutiny after being slapped with a $165 million penalty for failing to comply with recall regulations.
At a Glance
- Ford agreed to a $165 million fine with NHTSA due to delayed recall of rearview cameras.
- The fine is NHTSA’s second-largest penalty, following the Takata airbag scandal.
- Ford must comply with a three-year consent decree under independent oversight.
- Quality control issues continue to affect Ford’s financial and operational stability.
Ford’s Massive Fine and Recall Issues
Ford Motor Company faces a $165 million penalty from the National Highway Traffic Safety Administration (NHTSA) for failing to recall vehicles equipped with defective rearview cameras in a timely manner. This fine is significant as it stands as the second-highest in the history of the NHTSA, only eclipsed by the Takata airbag consent order.
The penalty is part of a settlement wherein Ford will make an up-front payment of $65 million. The NHTSA investigation revealed Ford’s negligence in filing accurate and timely recall reports, which pertains to vehicles such as the F-150 trucks and Explorer SUVs fitted with faulty safety cameras.
We're announcing a consent order with Ford for failing to comply with federal recall requirements. The order includes a civil penalty of $165 million, the second-largest civil penalty in NHTSA’s history.
More: https://t.co/t3hVSBhLUs pic.twitter.com/HJXqF5f5oS
— nhtsagov (@NHTSAgov) November 14, 2024
Consent Decree and Financial Implications
As part of the agreement with the NHTSA, Ford will adhere to a three-year consent decree. An independent third-party overseer will ensure Ford complies with the recommendations. The decree demands Ford invests $45 million in advanced data analytics and builds an imaging test lab for low-voltage electronics.
“The total civil penalty amount of $165 million is second only to the Takata airbag consent order in the agency’s 54-year history,” per the NHTSA.
The quality-control lapses have contributed to financial strain on Ford, reflected in increasing warranty expenses. The mixed financial performance due to these issues has seen Ford’s stock value slipping.
Ford’s Response and Future Measures
Ford, while disagreeing with NHTSA’s findings, settled the dispute administratively to avoid prolonged legal battles. CEO Jim Farley has taken steps to rectify the quality-control issues plaguing the automaker. Improvements have been seen in the J.D. Power “initial quality” report, indicating a gradual turnaround.
“Timely and accurate recalls are critical to keeping everyone safe on our roads. NHTSA is committed to ensuring manufacturers comply with the laws designed to keep our roads safe. When manufacturers fail to prioritize the safety of the American public and meet their obligations under federal law, NHTSA will hold them accountable,” per NHTSA Deputy Administrator Sophie Shulman.
Along with the fine, Ford must hold $55 million in abeyance contingent on full compliance with the consent decree. The company is also tasked with reviewing past recalls from the last three years to assess if additional measures are needed, aligning their practices with stringent standards aimed at bolstering safety compliance.
