Federal highway safety officials reportedly have said the New Jersey company being ordered to recall as many as 450,000 faulty tyres imported from China faces millions of dollars in fines if it fails to properly remedy the situation.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The National Highway Traffic Safety Administration (NHTSA) sent Foreign Tyre Sales a letter stating that it is legally responsible for the recall and faces penalties of up to $US6,000 per violation, with a maximum of nearly $16.4m for any series of related violations, the Associated Press (AP) reported.
The government, which has given the company until 2 July to respond to the letter sent on Tuesday, said the company’s argument “that it is not in a position to conduct a recall is not acceptable”, the report added.
But an FTS lawyer told AP that the company can afford only about 10% of the roughly $80m in expenses associated with a full recall.
“FTS will comply with every law, every rule, every regulation, every directive to the extent the money holds out,” Larry Lavigne was quoted as saying, and adding that FTS is working on its reply to the government, and he hopes to submit it prior to the deadline.
The company was reported to have sent the highway safety agency a letter earlier this month that said up to 450,000 light truck radials imported from China-based Hangzhou Zhongce Rubber could suffer tread separation because they were made without a safety feature that helps bind the belts.
FTS said then it does not have the financial resources for a full recall and would be forced to file for bankruptcy if required to conduct one.
Hangzhou Zhongce meanwhile denied that it supplied faulty products and accused FTS of making the claim to bolster a lawsuit it filed against the Chinese company last month, AP noted.
