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When Will Drivers Say 'Enough'?

Edward Niedermeyer, an auto-industry analyst, is the co-founder of Daily Kanban and the former editor of the blog The Truth About Cars.
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Ever since the U.S. began seriously regulating automotive safety in the 1970s, deaths on the nation's roadways have been in steady decline. Though the last 40 years have been punctuated by a few notable auto-safety scandals, these have been relatively rare, and two of the biggest (Audi in the 1980s and Toyota in 2009-2011) hinged on the dubious phenomenon of "sudden unintended acceleration." As recently as 18 months ago, the casual observer might well have concluded that automotive safety was a problem that was fixing itself and thus unlikely to yield much further public scrutiny. Today, such optimism seems unwarranted.

This week, the auto industry broke the record for the largest consumer product recall in U.S. history when Takata doubled its already-massive recall to nearly 34 million vehicles, admitting that its air bags -- which can explode when they deploy -- were defective. The previous record was held by the 1982 recall of 31 million bottles of Tylenol, when a man allegedly laced the painkillers with potassium cyanide. But for all the comic-book villainy of that terrifying incident, it seems almost random when compared to Takata's death-by-bean-counting spree. One can accept that a small number of psychopaths will always lurk in society's shadows, but when the giant companies responsible for your day-to-day safety can't find the root cause of a lethal defect after years of warnings from its clients and engineers, the terror becomes truly systemic.

The cost savings Takata apparently enjoyed by using ammonium nitrate as an air-bag inflator made it a leading supplier, and now 11 automakers find themselves exposed to the potentially lethal defect. But Takata's exploding air bags are just one of three major auto-safety scandals that continue to grow more troubling with each passing day.

General Motors now acknowledges that its ignition switch defect was responsible for 104 deaths, 12 maimings and 179 serious injuries -- numbers that quietly continue to grow (for comparison, six deaths and more than 100 injuries have been tied to the Takata defect). Meanwhile, Fiat Chrysler Automobiles has been called to appear at a rare public National Highway Traffic Safety Administration hearing to determine whether the automaker adequately addressed and fixed defects in 20 separate recalls. 

All three cases involve defects with air bags, which have been mandatory equipment since 1989 and have saved thousands of lives, according to the NHTSA. In the GM and Takata cases, the defects have been directly tied to cost-cutting measures, and the NHTSA's hearing is likely to delve into similar motivations behind cash-strapped Fiat's alleged pattern of inadequate recall performance.

And in all three cases, the companies have deepened their breaches of public trust by handling public and regulatory concerns with breathtaking hostility. GM fervently denied analyses that showed 74 deaths were tied to its switch defect, insisting that its initial 13-death finding would hold up. The NHTSA was so frustrated with Takata's non-cooperation that it said the supplier "is neither being forthcoming with the information that it is legally obligated to supply, nor is it being cooperative in aiding NHTSA’s ongoing investigation." And after the NHTSA told Fiat to "get their act in gear" last November, the automaker's chief executive officer, Sergio Marchionne, responded scornfully, saying, "I think NHTSA is experimenting with both the exercise of their authority and the scope of their authority and how to use that authority, and the industry is getting used to responding to that usage of authority."

Having taken its share of the blame for not catching the recent crop of defects sooner, the NHTSA is clearly in no mood to let Marchionne's dismissive attitude slide. After all, the industry has collectively brought back the image of the Ralph Nader-era car-company villain -- one who weighs "acceptable" human losses against profits, conceals defects from the public, and struggles to project any sense of corporate conscience. Though none of the modern automakers come as close to embodying this stereotype as many did in the 1970s, the reminders of that period now hang over the entire industry. 

The car business has good reasons for nursing a reflexive dislike of regulation, but right now it needs a regulator to save it from itself. Though driving continues to get safer, it's still the most dangerous thing most Americans do every day, even when the industry isn't concealing and denying defects as long as it can get away with it.

If individual automakers and suppliers lose credibility on safety, they risk losing sales to competitors, but if the whole industry loses the public's trust, it widens the opportunity for Silicon Valley companies to foment disruptions of the entire business. After all, Google is threatening to eliminate the single greatest source of road danger -- the human driver -- while automakers still struggle to live up to the regulations and consumer expectations that were supposed to end the bad old days of auto safety.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Edward Niedermeyer at edward.niedermeyer@gmail.com

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net