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Saturday, February 4, 2012

NHTSA: public enemy #1?

While we may not always think so, the NHTSA is arguably the most powerful entity in the automotive industry. United States has long been the largest market for automobiles (until China recently pulled ahead) and engineers from automakers across the world have to create products that meet whatever safety and fuel economy standard that the NHTSA enforces. These safety and fuel economy standards are established for the sole purpose to protect the millions of Americans sitting behind the wheel.

It's an important responsibility and since the NHTSA was officially established more than four decades ago, the agency's integrity was never put to question. However, two incidents in the past couple of years have made me a bit concerned. Let me explain.

In 2009, Toyota faced a public crisis when the media revealed that owners have reported incidents of unintended acceleration. Although Toyota first installed electronic throttles in 2002, a spike in the number of reported incidents triggered NHTSA to re-open the case and perform one of the most extensive NHTSA investigations since the Ford Explorer/Firestone fiasco. Eventually, with the help of NASA, another well-known technical agency of the United States, the investigators and researchers at NHTSA came up empty and concluded that findings indicated causes for unintended acceleration were nothing more than floor mat obstruction or driver error. The simplest answer is usually the correct one.

Then, not long after the Toyota investigations closed, a new controversy surfaced when a Chevrolet Volt caught fire at NHTSA's testing center on May 12, three weeks after its battery cell was severely compromised from a side impact crash test. In November, the NHTSA launched an investigation that scrutinized the safety of the Volt's lithium-ion batteries. This investigation expanded to ask automakers GM, Nissan, and Ford to all cooperate, and to ensure the integrity and crash-worthiness of the battery-cell of their own electric vehicles. Finally, according to NHTSA's final report, the available data could show no greater risk of fire with a Volt than a traditional gas-powered car.

Case closed and job done, right? Not so fast. The House Committee on Oversight and Government Reform held a hearing bluntly titled, "Volt Vehicle Fire: What Did NHTSA Know & When Did They Know It?" In a nutshell, some individuals (read: Republicans), challenged that NHTSA knew of some really bad information in regards to the Chevy Volt and have been trying to keep the battery fire a secret for fear of causing damage to GM, the country's investment in GM, the Obama Administration's relationship with GM, as well as President Obama's odds for re-election. After all, why else would the agency launch the investigation in November when the fire occurred in May? NHTSA defended its intentions and insisted that their investigation was thorough. What's more, data collected by NASA proved to be comparable with the data NHTSA had accumulated. 

Matters with Toyota weren't over either. Like the ghost of Christmas past, Toyota's unintended acceleration incident came back to haunt NHTSA almost a year after the agency has closed its investigation. An independent auto-safety firm, Safety Research and Strategies, had filed a lawsuit in federal court against NHTSA, requesting for the release of internal records related to said investigation with reason to believe that the agency withheld documents and videos that suggest unintended acceleration incidents were caused by electronics systems rather than floor mat or driver error. NHTSA, of course, denies wrongdoing.

Thanks for bearing with me so far but I'm getting to my point: Is the NHTSA corruptible? Is the body already compromised?

Back in 2008, the global economy suffered a shocking collapse when financial institutions across the world suddenly found themselves waist deep in over-leveraged mortgage backed securities. Lehman Brothers realized moments before bankruptcy that if their holdings in MBS were to drop 20%, the loss would be greater than the entire value of the company.

Credit rating agencies, the body responsible for auditing financial banks as well as their financial products and assets to keep things in check, either never saw it coming, took too long to react, or simply turned a blind eye to give the banks freedom. AAA rated securities were actually worth less than a dollar.

Nothing of that extent has happened in the automotive industry and I can't imagine that it ever will. However, what if NHTSA becomes the automotive industry equivalent to Moody's or Standard & Poor's? It makes you wonder...

2 comments:

  1. These gross overreactions can have such a great affect on the companies that are involved, its really a question of ethics at this point. If you are going to claim something then it really needs to be properly documented. As soon as its something like catching fire or losing your brakes the media is going to blow it up themselves.

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