NHTSA Files Federal Suit Against Vehicle Importer

The National Highway Traffic Safety Administration (NHTSA) has taken unprecedented steps against the importer of a Chinese-made three-wheeled vehicle. NHTSA has filed a suit against ZAP Jonway demanding that the California company pay $17.35 million in fines and also refund the amount of $3,100 to 691 purchasers of the vehicles due to the company’s repeated failure to fix defective braking systems.

The vehicles involved are 2008 ZAP Xebra models manufactured by China Qingqi Group Inc. NHTSA purchased a Xebra in late 2008 and found that it did not meet minimum stopping distance requirements.

ZAP agreed to recall the vehicles in 2009, but NHTSA claims that the company did not have an effective way for repairing the fault, and only had contact details for 116 of the 691 people that had purchased the vehicles. A follow up by NHTSA in October 2011 led to assurances that a recall would be made, but the agency says that this was never done and that the company continued to sell the Xebra in breach of the National Traffic and Motor Vehicle Safety Act, 1996.

ZAP reportedly assured the safety agency that it would repurchase the vehicles if it was unable to come up with a way to fix the braking problem. When the company’s efforts proved unsuccessful, and no repurchase campaign took place, NHTSA ordered a public hearing in October 2012.

After the public hearing, NHTSA ordered ZAP to refund the owners of the vehicles the current market value of $3,100. ZAP was also ordered to destroy or permanently disable all remaining stock of Xebras. This is the first time the agency has used its statutory powers to compel a manufacturer to comply with its obligations under the 1996 Safety Act.

The suit was filed on May 6 in Washington and seeks the maximum allowable fine. NHTSA had originally been seeking fines of between $6,000 and $7,000 per day for each violation, but that would have exceeded the statutory cap.

The filing detailed how ZAP had left customers “in the dark” with unsafe vehicles and had provided “conflicting or inadequate information” to NHTSA. It also described ZAP’s recall efforts as “false, misleading, untimely or non-existent” and how the company “repeatedly and blatantly” ignored its obligations.

In a subsequent filing on May 29, a lawyer for ZAP and a Justice Department trial counsel announced that both parties were exploring a settlement, and that “significant progress” had been made.

Additional Reading:

The Detroit News. U.S. wants EV Motorcycle Company to pay $17 M fine for unsafe vehicles. http://www.detroitnews.com/article/20130612/AUTO01/306120103/1361/U.S.-wants-EV-motorcycle-company-to-pay-$17M-fine-for-unsafe-vehicles
Safecar.gov. Recall Subject: Master Cylinder Reservoir Cover. http://www-odi.nhtsa.dot.gov/owners/SearchResults?searchType=ID&targetCategory=R&searchCriteria.nhtsa_ids=12V363000&refurl=rss
District Court of Columbia. Civil Action No. 13-646.  http://www.dealernews.com/sites/dealernews/files/files/ZAP%20NHTSA%20complaint.pdf4. Zap Electric Vehicles. Brake Modifications for Certain 2008 Xebra Cars.  http://www.zapworld.com/email-customer-support

Resource: Phoenix Auto Accident Law Firm