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Ahead of the Curve Auto Supplier Blog

March 18, 2013

Supplier Beware: OEMs May Be Tougher than the Feds Following a Recall

Pop Quiz: You become aware of a defect in a part that you manufacture and supply to OEMs for installation in thousands of new motor vehicles, requiring a major recall. What do you do? Somewhat surprisingly, unless you manufacture replacement equipment or tires, federal regulations do not require you to do much. Because the OEMs will be responsible for conducting the recall itself, your primary obligation will be to submit the initial "Part 573 Report" to the NHTSA. In the report, you will identify the defective part, describe the nature of the defect, estimate the number of vehicles affected, provide a plan for repair or replacement and list the OEM or other suppliers to whom your part was sold. If the defect is not in your part but in a sub-component that is manufactured by another supplier, you will have to disclose the identity of that supplier. To review all of this and other information you may be required to provide as part of your “Part 573 Report,” take a look at a blank report from the NHTSA’s website:  http://www-odi.nhtsa.dot.gov/recalls/forms/Safety_Defect_and_Noncompliance_Report_for_Equipment.pdf. It is important to keep in mind, however, that the Part 573 Report may not be the extent of your responsibility in the event of a recall. While federal regulations may go easy on suppliers, you should expect that the supply contract with an OEM will pick up the slack.  This contract may outline the process for reporting any defects to the OEM or to your customer (if a higher tiered supplier), apportion liability for any such defects and an ensuing recall, and require you to provide assistance to the OEM in meeting its own NHTSA reporting obligations and in providing consumers with a remedy.  

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