ARC Automotive, a Tennessee-based company, is refusing to recall 67 million air bag inflators, despite a request from the National Highway Traffic Safety Administration to do so.
After an eight-year investigation, the NHTSA concluded that ARC inflators have a safety defect that creates an unreasonable risk of death and injury.
The agency demands that ARC recall the inflators because they could explode and hurl shrapnel. The company has argued that the recall demand exceeds the agency’s legal authority and that auto manufacturers, not equipment manufacturers like ARC, must do recalls.
The company could be heading for a legal battle with auto safety regulators.
If ARC rejects the recall, the NHTSA might arrange a public hearing and file a lawsuit to compel the company to issue a recall. Consequently, the company may face legal penalties and be obligated to provide compensation or pay fines to individuals affected by faulty airbag inflators.
The penalties for violating federal safety regulations can include fines, imprisonment and civil penalties. The specific penalties would depend on the nature and severity of the violation and the applicable federal and state laws.
ARC is simply on the wrong side of public relations and automotive history.
It’s tough for any company to rebound from the brand damage that ARC is doing. There is a massive window for potential loss of customers and business due to the ensuing controversy. Airbag manufacturers are businesses that exist for our safety — that’s all they’re here to do.
Fighting a recall is the worst-case scenario when it comes to public relations. In 2019, the now-defunct Takata Corp. was responsible for the largest recall in automotive history.
The Takata recall began in 2008 when reports of airbag ruptures and injuries emerged. Takata, a Japanese automotive parts manufacturer, supplied faulty airbag inflators to numerous automobile manufacturers, including Honda, Toyota, Ford, General Motors, BMW and others. Initially, the recall was limited to specific regions with high humidity, such as Gulf Coast states. However, it later expanded to include vehicles worldwide due to concerns about the long-term safety of the affected airbags.
Takata eventually went out of business due to the financial and legal repercussions of the recall. The recall and associated lawsuits placed a significant financial burden on the company, leading to its bankruptcy.
Ultimately, Takata’s failure was a brand trust issue, yet it’s one that ARC doesn’t seem capable of learning. There’s no path back to consumer trust from where ARC finds itself today.