Volvo NHTSA Civil Penalties: Company to Undergo Major Changes after $130 Million Fine
Overview of the NHTSA Investigation and Consent Order
The National Highway Traffic Safety Administration (NHTSA) has issued a consent order with $130 million in total civil penalties to Volvo Group North America after an investigation found the company failed to recall heavy-duty trucks and buses in a timely fashion. The NHTSA investigation also found that the company — a collective of several manufacturers — failed to comply with other recall and reporting requirements, including notifying owners of recalls and reporting death and injury incidents. The total penalties is one of the largest-ever for violations of the Vehicle Safety Act.
According to the consent order, NHTSA found that Volvo Group North America violated the act by:
- Untimely filing certain recalls
- Including inaccurate information in its DIRs
- Failing to comply with requirements for notifying owners of a recall
- Failing to submit certain quarterly recall reports
- Failing to submit certain manufacturer communications
- Failing to comply with the early warning reporting requirements by not reporting certain death and injury incidents and not submitting certain field reports.
The consent order, mutually agreed to by both parties, includes both monetary and non-monetary provisions designed to improve Volvo Group North America’s compliance with the law and the company’s safety practices.
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What’s Next for Volvo Group North America?
1) Third-Party Audit
Volvo Group North America has agreed to oversight by an independent third-party auditor, as well as to meet regularly with NHTSA to ensure that it addresses any potential safety issues, according to a NHTSA news release.
The auditor will review Volvo Group North America’s processes to assess compliance with the Vehicle Safety Act, regulations, and the consent order, and recommend and oversee implementation of organizational and process improvements to enhance Federal Motor Vehicle Safety Standards compliance and certification. The auditor will also oversee a review of past submissions to NHTSA for accuracy and completeness.
2) Development of Safety Data Analytics Infrastructure
Volvo Group North America will develop and implement a safety data analytics infrastructure to enhance its ability to detect and investigate potential safety defects.
The company will develop written procedures and training for its employees on compliance with the Vehicle Safety Act, regulations, and the consent order, as well as a training schedule to ensure that its employees are on-boarded and trained appropriately. Volvo Group North America will also launch a user interface on its websites to allow users to search vehicle identification numbers for open recalls and implement a system to support NHTSA’s VIN lookup tool.
3) Pay Up
The term of this consent order with NHTSA is three years, which NHTSA may extend for up to two additional years if warranted. The consent order requires the company to make an upfront payment of $65 million and spend an additional $20 million on the specific performance obligation to create a safety data analytics infrastructure, and includes an additional $45 million deferred penalty that may become payable under specified circumstances.
The vehicles related to this consent order were:
- 2017 Volvo Bus 9700
- 2011 and 2016 Volvo 780
- 2009-2017 Volvo VAH
- 2009-2011 Volvo VH
- 2009-2017 Volvo VHD
- 2009-2017 Volvo VN
- 2009-2017 Volvo VNL
- 2009-2017 Volvo VNM
- 2013-2017 Volvo VNX
- 2009-2016 Volvo VT
Potential Impact on Volvo’s Reputation and Future Business
The hefty civil penalties and the new oversight requirements may have a significant impact on Volvo Group North America’s reputation in the industry. With the negative publicity surrounding the consent order, customers might be more hesitant to purchase vehicles from the affected manufacturers, which could result in a decline in sales.
However, the consent order also presents an opportunity for Volvo Group North America to demonstrate its commitment to safety and compliance with the Vehicle Safety Act. By actively addressing the issues outlined in the consent order and investing in a robust safety data analytics infrastructure, the company can rebuild its reputation and regain the trust of consumers.
Lessons for Other Manufacturers
The Volvo NHTSA civil penalties serve as a stark reminder for other vehicle manufacturers to prioritize safety and compliance with the Vehicle Safety Act. Failing to do so can result in significant financial penalties, reputational damage, and potentially even more severe consequences if safety defects are left unaddressed.
It is crucial for manufacturers to have robust internal processes in place to ensure timely recall filings, accurate reporting, and efficient communication with vehicle owners. Investing in safety data analytics infrastructure and continuous employee training can further enhance a company’s ability to detect and address potential safety issues.
The $130 million in civil penalties imposed on Volvo Group North America by the NHTSA is a significant development in the automotive industry, emphasizing the importance of compliance with the Vehicle Safety Act. The consent order outlines several steps that the company must take to improve its safety practices and ensure future compliance. As Volvo works to address these issues, other manufacturers should take note and prioritize safety and compliance to avoid similar consequences.
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