Honda Fined Largest Amount In History, Latest Auto Maker On Receiving End Of Gov’t Crackdown

The US government is fining Honda $70 million for not reporting to safety regulators more than 1,700 complaints that its vehicles caused deaths and injuries. The Obama administration announced what is the largest civil penalty levied against an automaker Thursday for not reporting to regulators some 1,729 complaints that its vehicles caused deaths and injuries.

The White House said Honda Motor Company (NYSE:HMC) also failed to report warranty claims.

The company acknowledged in November that it failed to report the death and injury complaints to the National Highway Traffic Safety Administration, which took place over an 11-year period beginning in 2003. However, the company said it only learned of the omissions in 2011, yet still waited three years to take appropriate action.

Honda’s failure to report warranty claims and claims under customer satisfaction campaigns occurred throughout the same period, according to officials. The safety administration is actually slapping the company with two fines. First, $35 million for not reporting the death and injury complaints, and second, another $35 million for not reporting the warranty and customer satisfaction claims.

Both fines are the maximums the agency is legally allowed to impose on the company.

Transportation Secretary Anthony Foxx said the maximum fines are to show the government will take tough stances against automakers who withhold safety information from federal regulators.

“What we cannot tolerate and will not tolerate is an automaker failing to report to us any recall issues,” Foxx said.

Honda has recalled more than 5 million vehicles in the U.S. since 2008 to fix a potentially fatal defect in Takata-made air bags, which accounted for a large number of the complaints filed. The air bag inflators were frequently rupturing after a crash and injuring vehicle drivers and passengers with the pieces of metal that essentially turned into projectiles.

On Dec. 29, Honda signed a consent order agreeing to pay the untold number of fines. However, officials said the fine’s amount is due to the fact that they have not yet received all the complaints from Honda and cannot assume a correct number of deaths and injuries that resulted.

“We have resolved this matter and will move forward to build on the important actions Honda has already taken to address our past shortcomings in early warning reporting,” Rick Schostek, executive vice president of Honda North America Inc., said in a statement.

The company said the omissions were a result of “errors related to data entry, computer coding, regulatory interpretation, and other errors in warranty and property damage claims reporting.”

Still, some aren’t satisfied with the record-setting penalty.

Clarence Ditlow, executive director of the center, said $70 million was too small a penalty considering that incidents involving Takata air bags are so representative of the complaints not reported.

“How many other deadly defects are concealed in the 1,729 death and injury claims not reported by Honda?” he asked. “The company must waive all statutes of limitations at the state and federal level over potential recalls or lawsuits arising out of defects concealed in the unreported claims.”

The Honda fine is just the latest in what has amounted to a government crackdown on auto makers by federal regulators in the previous year. The traffic safety administration slapped $126 million in fines against automakers in the year 2014, which is more than all the fines put together in the agency’s previous 43 years.

The administration is on a roll for record-making. In May, the government dropped the first maximum $35 million fine in the administration’s history against General Motors. They allegedly took more than a decade to disclose an ignition-switch defect in millions of cars that has been linked to at least 42 deaths and 58 injuries, so far.

Under an agreement with the Transportation Department, GM admitted it was slow to inform regulators, promised to report problems faster and submitted to more in-depth government oversight of its safety operations.

But many lawmakers and safety advocates place blame with the safety administration, as well, whom they say has been too busy rubbing shoulders with auto makers to conduct oversight. They have also accused the traffic safety administration of not identifying dangerous safety defects based on reports made directly to the agency by consumers and police, or looking the other way for their own crony benefit.

Nevertheless, Foxx said information about Honda’s failure to disclose the complaints have also been sent over to the Justice Department, where officials will consider if criminal charges are appropriate.