On Sept. 9, 1966, President Lyndon Johnson made a promise to the American people.
"We are going to cut down this senseless loss of lives," he said. "We are going to cut down the pointless injury. We are going to cut down the heartbreak."
Johnson made his comments when he signed the Vehicle Safety Act into law. The act was one of several initiatives that came in response to a growing number of traffic deaths and injuries.
LBJ made a grim comparison to underscore the seriousness of the problem, noting that over the recent Labor Day weekend, 29 American servicemen had died in the Vietnam War, while 614 Americans perished in automobile accidents over the same period.
Johnson said "safety is no luxury item, it is no optional extra; it must be a normal cost of doing business."
On Jan. 30, 2023, the National Highway Traffic Safety Administration invoked the Vehicle Safety Act when the agency announced a consent order with Volvo Group North America.
The consent order included a total civil penalty of $130 million, one of the largest-ever penalties for violations of the Vehicle Safety Act.
“NHTSA will use the full scope of our authorities to protect the public from safety defects and from manufacturers that create potential safety problems by failing to comply with the law,” NHTSA Acting Administrator Ann Carlson said in a statement.
Volvo Group North America (VLVLY) is the parent of Mack Trucks, Nova Bus, Prevost Car (US), VNA Holding and Volvo Group Canada.
Volvo Agrees to Third-Party Oversight
NHTSA opened an investigation into Volvo in October 2018 including recall timeliness and manufacturer communications and early warning reporting requirements.
Among other things, the agency said Volvo failed to comply with requirements for notifying owners of a recall, failed to submit certain quarterly recall reports, failed to submit certain manufacturer communications, and failed to comply with early warning requirements by not reporting certain deaths and injuries.
Volvo Group must pay $65 million within 60 days. An additional $45 million is due if the company violates the agreement.
The vehicle maker will also spend $20 million to develop “a safety data analytics infrastructure to enhance its ability to detect and investigate potential safety defects,” NHTSA said.
In addition, the company will develop written procedures and training for its employees on compliance with the Vehicle Safety Act.
Volvo Group North America 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.
A Volvo spokesperson said "safety is of paramount importance to the Volvo Group."
"We appreciate the opportunity to summarily resolve this matter, and we look forward to continuing our close work with NHTSA to identify and close any compliance gaps," the spokesperson said.
"Wide-ranging improvements in our North American safety processes and systems are already underway, and we’re dedicated to having a best-in-class safety organization moving forward," the spokesperson added.
Analyst Says NHTSA 'Sending A Message'
George Ball, a professor at Indiana University who studies product recalls, said “the non-monetary aspect of this settlement is more interesting and telling for how NHTSA may behave in the future.”
"NHTSA is sending a message to automotive manufacturers with this aggressive action," he said
"Not only will firms suffer more, financially, if NHTSA believes they have shirked their quality responsibilities, but NHTSA, if necessary, will step in and direct how the firm makes product quality decisions; including being involved in business process improvements," he added.
Ball said this was a paradigm shift consistent with what is happening at the U.S. Consumer Product Safety Commission as well.
"The Biden administration seems to be taking a much stronger stand when it comes to protecting consumers from potentially unsafe products, and ensuring that firms recall as often and as quickly as they need to," he said.
Volvo recently recalled more than 100,000 cars, including more than 27,000 in the U.S., due to a problem with the brake-by-wire systems.
Volvo said it would release an over-the-air BCM2 software update free of charge to address the problem.
