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Compliance Building

Doug Cornelius on compliance for private equity real estate

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How Compliant Should You Have to Be?

Posted on February 27, 2018 by Doug Cornelius
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BMW issued a voluntary recall of all BMW i3 electric cars ever sold in the U.S.  and has sent a stop-sale order to its U.S. dealers for any new or used i3 vehicles. There have only been 30,000 sold. That’s not very many, but it’s all of them. The reason is a “compliance issue” with federal regulators over a failed National Highway Traffic Safety Administration crash test.

Compliance issue caught my attention in connection with its electric car. (I don’t drive a BMW and think the i3 is a weird looking car.)

“While BMW’s compliance testing showed results well below the required limits, more recent testing has shown inconsistent results. Consequently, BMW has issued a recall and is working with the agency to understand the differences in the test results.”

This is not a Volkswagen fake-testing issue. The company saw slightly different results than the government tests.

The test failures are very specific. The tests resulted in a marginally higher neck load on 5% of the population. That 5% is adult females who are around five feet tall and weigh about 110 pounds. The failure also only applies to someone sitting in the driver’s seat and not wearing a seatbelt.

Being in New England, I’m reminded that “Live Free or Die” New Hampshire is the only state that does not mandate seat belt use. In every other state there is a law requiring seat belt use.

To protect petite women who live in New Hampshire, BMW has to recall all of the i3 cars. It’s a tough penalty for getting the company’s crash results wrong.

Of course, the answer would seem to be: “Wear a seatbelt.”

That leaves me with a libertarian conundrum. Impose a regulation requiring seatbelt use? or impose a regulation requiring additional design cost so that people don’t have to wear seat belts?

Where is the best place to impose compliance?

Sources:

  • BMW Issues Recall And Stop-Sale Order On All U.S. i3 Cars.
  • BMW Halts U.S. i3 Sales Because One New Hampshire Woman May Hurt Her Neck
  • BMW Issues Stop-Sale Order and Recall of All i3 EVs in U.S.

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