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South Korea Vows Tougher Penalties for Tardy Recalls
South Korea proposes to increase its penalties against carmakers that hide defects or delay in fixing them.
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South Korea proposes to increase its penalties against carmakers that hide defects or delay in fixing them.
The tougher penalties have been prompted by government suspicions that BMW AG failed for years to take action on a known fire threat caused by faulty diesel exhaust gas recirculation systems. The defect has been blamed for more than 40 BMW car fires in Korea this year.
The government proposal would hike penalties to 3% from 1% of the sales revenue generated by an affected model, the Financial Times reports. Carmakers also would be fined more than five times the cost of repairs that would otherwise be paid by owners, up from the current three times.
Company executives found guilty of concealing defects already face as many as 10 years in prison and a fine of 100 million won ($89,100).
Korea’s transport ministry says the penalties are intended to pressure carmakers into dealing with defects promptly. The ministry warns that the penalties could be increased as the proposal is finalized.
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