NHTSA Shrugged

There's a new sheriff in town... and he's big on self-enforcement.

There’s a new sheriff in town… and he’s big on self-enforcement.

As the GM ignition switch scandal snowballed over the last year, there has been much debate about just how much blame NHTSA bears for not catching the decade-old defect. The House Committee on Energy and Commerce staff report [PDF] analyzes NHTSA’s failure to prevent the deaths of 84 Americans (and counting), and concluded that a number of factors prevented NHTSA from detecting patterns that GM’s own top executives claim to never have known about. With headings like “information silos ” and “organizational tunnel vision,” the failures identified in the report are strikingly similar to the culture problems blamed for GM’s malfeasance; there’s even a “NHTSA shrug” to match the “GM shrug” identified in GM’s Valukas Report.  But the report’s final page gives the ultimate version of what we might as well start calling the “American shrug”:

There are no simple solutions to the failures exposed by this recall.

Which is true enough, as far as it goes. Again, if GM’s own leadership couldn’t identify the problem amid ten years of evidence it’s fair to say NHTSA didn’t have a chance. So rather than wondering why NHTSA isn’t capable of catching the worst-case nightmare scenario, perhaps we should be setting the bar a little lower. For example, let’s ask if NHTSA can at least ensure recalled cars don’t get sold before being repaired and if it can apply its efforts consistently. Because apparently even these modest standards are too much to ask…

Today, Automotive News reported that:

General Motors is rolling out new software this month for dealerships to make it harder for them to mistakenly sell a new vehicle that’s subject to a recall, without first performing the recall work as required.

Apparently the “mistaken” sales of unrepaired recalled vehicles have been something of an issue for General Motors. NHTSA opened an investigation into Chapman Chevrolet of Philadelphia in 2012 over allegations it sold and delivered 23 unrepaired recalled vehicles, a case that was settled last October with a $50,000 fine. Last year, NHTSA also opened a still-pending investigation into Sands Chevrolet of Surprise, Arizona for selling an unrepaired recalled vehicle. And just last month, Hawthorne Chevrolet was caught selling unrepaired recalled vehicles to investigative journalists from ABC News, an incident its staff blamed on “human error.” The ABC report noted that “several hundred vehicles from various automakers” were sold without having necessary recall repairs made, but didn’t identify any specific instances other than Hawthorne Chevrolet.

GM’s response to this ugly pattern, the software tools being installed at its dealers starting this month, are touted by the firm’s VP of customer care as a reflection of the firm’s commitment to “consider[ing] safety a core value, a core priority.” Yet GM’s tools seem engineered to tap into the less noble instincts of its dealers: a key feature prevents dealers from finding incentive information about apparently unrepaired recalled vehicles. Though the design is pragmatic, especially for a company that consistently has some of the highest incentives in the US market, it’s a nasty reminder that the only way to get GM’s dealers to “consider safety a core value, a core priority” is through their access to incentive information.

The thing is, this isn’t just about living up to a corporate mission statement or providing a high level of customer care:  selling a recalled vehicle without having made the required repairs is against the law. GM’s software doesn’t just indict the moral fiber of its dealer body, it demonstrates the permissive, lawless environment that allows such amorality to blossom into criminality. But rather than recognize this as a major failing on the part of his regulators, NHTSA Administrator Mark Rosekind hailed GM’s new effort telling the World Traffic Safety Symposium

There is no legal requirement today for GM to make these changes. There’s a lot of innovation going on. It’s a pleasure to acknowledge GM.

At the same time, Rosekind pointed out that GM had taken this action in response to the $50,000 fine paid by Chapman Chevrolet last October for failing to meet its legal requirements. If Rosekind had any faith in the deterrent value of NHTSA’s oversight or fines, he’d have no reason to say that “all other manufacturers and dealers should embrace the proactive approach that GM is taking.” Needless to say, the fact that he obviously doesn’t believe in his own agency’s ability to effectively enforce the law shows just how little Americans should expect from their auto safety regulators. It’s one thing to be unable to find a well-concealed defect before it kills more than 80 people, but it’s quite another to be unable to stop defective cars from being sold after they have been recalled.

NHTSA’s shrugging impotence in relation to GM and its dealers is all the more galling when compared to Toyota’s treatment at the hands of regulators. Transportation Secretary Ray LaHood hastily urged Toyota owners to stop driving their vehicles and take them to a Toyota dealer as soon as possible, and then-NHTSA administrator David Strickland followed up by telling the media

NHTSA has already started contacting consumers about these complaints to get to the bottom of the problem and to make sure Toyota is doing everything possible to make its vehicles safe. If Toyota owners are still experiencing sudden acceleration incidents after taking their cars to the dealership, we want to know about it.

At the time, there was no credible evidence that Toyota dealers were unwilling or unable to perform the various fixes intended to tame alleged unintended acceleration yet the nation’s top auto regulators leaped into attack mode. Now, with one Chevy dealer having been fined by NHTSA, another still under investigation and at least one other caught selling unrepaired recalled vehicles by ABC News, NHTSA’s Administrator has nothing but praise for GM’s “voluntary” and “innovative” approach towards helping its dealers meet their legal responsibilities. Yet with only 70% of the deadly ignition switches repaired more than a year after their recall, the public is still far from being out of harm’s way.

If NHTSA truly can’t effectively regulate auto safety because of technological or organizational shortcomings, those are problems that might be fixed. But if NHTSA is cutting GM slack, as the comparison with Toyota’s treatment seems to suggest, that would point to a far deeper, more troubling problem. The government’s close relationship with General Motors in the wake of its bailout is already a challenge to the notion that automakers compete on a level playing field. If that relationship has affected the objectivity of automotive safety regulation, consumers should be every bit as worried as the automakers.