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An Overview of Proposed Amendments to Defect
Notification and Early Warning Reporting Regulations
Tucked away in the recently enacted 584 page "Moving Ahead
for Progress in the 21st Century Act" is a small provision
directing NHTSA to make individualized motor vehicle recall
information publically available in a searchable on-line database.
The idea is that any vehicle owner using his or her VIN could
search for any recalls related to that specific vehicle and
determine if or when the recall repairs have been performed. On
Monday, September 10, 2012, NHTSA published proposed rules that
would, among other things, amend defect reporting requirements in
order to facilitate the creation of that data base. NHTSA is now
seeking comments on the proposed amendments.
Under NHTSA's proposal, all major OEMs would be required to
include with their Rule 573 "defect and noncompliance"
notifications an electronic listing identifying by VIN all
potentially affected vehicles and the recall status of each VIN.
Originally, each VIN would be identified as "unremedied."
Then, as a recall proceeds, the OEM would have to update the
"status" information ON A DAILY BASIS FOR 10 YEARS. So,
as each individual vehicle is repaired the status would have to be
changed to "inspected and repaired" or "inspected
and determined not to require repair" and the date of the
inspection/repair would have to be added. If a vehicle is not
available for repair because it was stolen or scrapped, that
information would also be added. NHTSA initially contemplates a
central recall database but it has asked for comment on whether
manufacturers could host their own sites.
Although directed to the OEMs, this recall requirement can be
expected to impose upon not only OEMs, but also suppliers, a new
layer of recall costs. OEMs will incur the upfront costs associated
with establishing procedures, programming, data collection and
processing necessary to supply the requested information.
Initially, they will have to up-load recall information for all
recalls conducted during the prior two years. They will also incur
added costs associated with the mandated 10 years of daily updates.
All OEM terms and conditions have provisions allowing for the
recovery of all costs associated with certain recalls from the
supply chain. A chunk of those costs are administrative costs and
the bill will now get higher. The impact on the automotive industry
and especially OEMs and their supply chain will obviously depend on
the magnitude of these costs.
The proposed rules also include new requirements for defect and
owner notifications. As to defect notifications, the rules
would:
Prohibit disclaimers by manufacturers in defect notifications
such as "we haven't concluded it's a safety defect but
filed the notice anyway."
Maintain the 5-day rule for submitting a defect notice but, if
the initial filing was incomplete, it would require updated
information to be filed within 5 days of it becoming
available.
Require review of the completeness of each defect notice within
90 days of remedy availability and certification by the
manufacturer that the information is complete and accurate.
For the recall of items of motor vehicle equipment, require the
manufacturer to include, in addition to the generic name of
component, its brand or trade name.
Mandate inclusion of a statement describing the risk of injury
associated with the defect, which most manufacturers do
already.
As to owner notifications, the proposed rules would require them
to be sent out within 60 days of the filing of the defect notice,
regardless of whether the remedy is available. A second
notification would be required after the remedy is available,
further increasing recall costs. NHTSA also proposes changes to the
information included on owner notification envelopes.
Finally, the proposed rules would expand OEM information
reporting requirements for early warning reporting of production
and incident and claim data.
The comment period for these proposed rules closes on November
9, 2012. The Docket Number is NHTSA-2012-0068.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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