NHTSA imposes $165m penalty on Ford, second highest in agency's history

Investigation reveals delays in Michigan car maker’s recall of vehicles with faulty rear-view cameras

A Ford Motor assembly worker with an F-series pickup truck at the Dearborn plant in Michigan. Reuters

The US Department of Transportation’s National Highway Traffic Safety Administration has imposed a $165 million penalty on Ford Motor for failing to meet federal recall standards. It was the second-largest civil penalty in the agency’s history.

The action stems from an NHTSA investigation that revealed delays in Ford’s recall of vehicles with faulty rear-view cameras and gaps in recall data required by federal law. Ford has also been ordered to strengthen its recall processes under a three-year consent order that includes oversight by an independent third party.

“Timely and accurate recalls are critical to keeping everyone safe on our roads,” NHTSA deputy administrator Sophie Shulman said. “When manufacturers fail to prioritise the safety of the American public and meet their obligations under federal law, NHTSA will hold them accountable.”

After the news, Ford's stock dropped 0.10 per cent to trade at $11.10 a share at 1pm New York time. The company’s shares have dropped more than 8.7 per cent since the start of the year.

The NHTSA’s consent order includes an upfront payment of $65 million, with another $55 million deferred and $45 million for performance obligations, the agency said.

The total civil penalty of $165 million is second only to the Takata air bag consent order in the NHTSA’s 54-year history. The agency imposed a $200 million fine on Takata in November 2015 for defective air bags that posed severe safety risks.

The NHTSA’s latest order requires Ford to enhance its safety data systems, bring in a comprehensive document interface for safety investigations, and develop a laboratory for electronics testing. Ford is also directed to re-evaluate recalls issued over the past three years to ensure compliance and, if necessary, file new recalls.

“The monetary and non-monetary provisions of the order are designed to improve Ford’s compliance with the law,” the NHTSA said. "An independent third party will oversee and make recommendations regarding all performance obligations and assess the company’s compliance with the consent order, the Vehicle Safety Act and federal regulations.”

In August, Ford was directed to recall 90,736 vehicles due to a risk of engine intake valves breaking while the vehicle is in motion, the NHTSA said. The regulator said that dealers will perform an engine cycle test and replace the engine as necessary, free of charge.

In the same month, the company announced a major shift in its electric vehicle strategy, scrapping plans to build an all-electric, three-row SUV as consumers remain concerned about the cost and range of electric vehicles.

The Dearborn, Michigan, car maker said it intends to prioritise hybrid vehicles for its next three-row SUVs, along with an electric commercial van in 2026 and two electric pickup trucks in 2027.