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Due to Recall, Fiat Chrysler to Pay Up to $105M in Penalties to NHTSA

The Fiat Chrysler Automobiles sign

The Fiat Chrysler Automobiles sign is seen after being unveiled at Chrysler World Headquarters in Auburn Hills, Mich. (freep.com)

Due to oversight and buy back nearly half-a-million of the vehicles it has recalled, Fiat Chrysler Automobiles will pay up to $105 million in fines and penalties to the National Highway Traffic Safety Administration (NHTSA). Penalties are issued Sunday for the auto company’s lax attitude toward addressing safety issues in millions of its vehicles.

Reported by freep.com, NHTSA said it was concerned about slow completion rates on recalls the automaker announced, slow or inadequate notifications to consumers, faulty approaches to fixing the safety issues and improper actions by dealers.

The penalty, the largest ever issued by the regulatory agency, reflects a tougher approach to automotive regulation in the wake of high-profile recalls last year by General Motors and airbag supplier Takata. It comes less than a month after NHTSA held a hearing to present evidence of Fiat Chrysler low recall completion rates for more than two dozen recall campaigns covering 11 million vehicles.

“Today’s action holds Fiat Chrysler accountable for its past failures, pushes them to get unsafe vehicles repaired or off the roads and takes concrete steps to keep Americans safer going forward,” U.S. Transportation Secretary Anthony Foxx in a statement. “This civil penalty puts manufacturers on notice that the Department will act when they do not take their obligations to repair safety defects seriously.”

The order requires Fiat Chrysler to pay a $70 million cash penalty and spend at least $20 million on meeting performance requirements included in the consent order. The automaker could be required to pay another $15 million if an independent monitor discovers additional violations.

NHTSA Administrator Mark Rosekind was appointed in December by U.S. President Barack Obama with a mandate from Congress to crack down on the auto industry.

“Fiat Chrysler’s pattern of poor performance put millions of its customers, and the driving public, at risk,” NHTSA Administrator Mark Rosekind said. “This action will provide relief to owners of defective vehicles, will help improve recall performance throughout the auto industry, and gives Fiat Chrysler the opportunity to embrace a proactive safety culture.”

The fine announced Sunday tops $70 million fines and penalties assessed against Honda Motor Co. in January for lapses in recalls of air bags made by Takata Corp. NHTSA said that penalty was a result of Honda’s failure to report 1,729 death and injury claims to NHTSA between 2003 and 2014.

In addition to the penalties, the order requires FCA to:

■ Offer to buy back more than half a million vehicles with defective suspension parts that could cause the vehicle to lose control. The vehicles, mainly Dodge SUV and Ram pickup trucks, were built between 2008 and 2012. The consent order does allow Fiat Chrsyler to repair and then resell the vehicles it buys back from the current owners. The automaker declined to provide an estimate on Sunday of the potential cost of its obligations beyond the civil penalties.

■ Offer owners of more than a million Jeeps Cherokee that are prone to deadly fires to trade their vehicle in for above its market value, or receive a financial incentive to get a trailer hitch installed for additional protection.

■ Agree to work with an independent monitor approved by NHTSA for the next three years. The monitor’s job will be to assess, track and report the company’s recall performance.

An independent monitor, while unusual, is not unprecedented. On July 9, NHTSA announced that Forest River, an Indiana-based maker of recreational vehicles, agreed as part of a consent order to pay a $35 million civil penalty as well as an independent monitor to conduct periodic audits of the company’s safety practices.

Fiat Chrysler, in a statement on Sunday, acknowledged that some of its recall processes and procedures have fallen short.

“We also accept the resulting consequences with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us,” the company said in a statement. “We are intent on rebuilding our relationship with NHTSA and we embrace the role of public safety advocate.”

The automaker’s statement on Sunday reflects comments made recently by CEO Sergio Marchionne, who said the automaker has been slow to change its practices in a new, tougher regulatory environment. “We have to continue to work with the agency to put us on the right path,” Marchionne said.

The order comes just two days after Fiat Chrysler was forced to issue a recall notice for 1.4 million cars and trucks so it can beef up the software in the vehicles and protect them from cyber-security attacks. That recall was prompted from a story published last Tuesday by Wired magazine that showed how two security experts were able to remotely hack into and take control of a Jeep Cherokee.

Fiat Chrysler also said Saturday it would recall 667,406 Ram trucks in North America to prevent the inadvertent deployment of side-curtain air-bags. The automaker said some of the pickups for 2013-2015 Ram 1500, 2500 and 2500 pickups may be set to deploy at low thresholds. The company said it is aware of two potentially related injuries, both described as minor, but no accidents.

NHTSA’s investigation into the automaker’s slow recall completion rates was prompted by Fiat Chrysler’s slow handling of a recall covering 1.56 million Jeep Grand Cherokee and Liberty SUVs for model years 2002-2007 for the Liberty and 1993-1998 for the Grand Cherokee. The Jeep SUVs have rear-mounted fuel tanks that NHTSA says are more prone too fiery rear-end collisions than SUVs made by other automakers.

The automaker agreed to recall Jeep SUVs in June 2013 and install tow hitches on them to provide additional rear end protection. But it took more than a year before the automaker was ready to conduct any of the repairs and only about 21% of the SUVs were repaired as of May 31.

The automaker frequently points out that it can be difficult to convince customers to respond to recall notices when many of the vehicles are more than 10 years old. In May, Fiat Chrysler said its dealers have more than 60,145 trailer hitches on their shelves and an additional 314,254 are in warehouses ready to be shipped.

The automaker also has taken steps to beef up its ability to quickly react when it identifies a safety issue. Last August, FCA appointed Scott Kunselman to the newly created position of senior vice president for vehicle safety and regulatory compliance. Kunselman reports directly to Marchionne.

In its statement Sunday, Fiat Chrysler said, “It has agreed to address certain industry objectives, such as identifying best practices for recall execution and researching obstacles that discourage consumers from responding to recall notices.”

Owners of vehicles who have questions about the recalls can call the company at 1-800-853-1403. A list of the 23 Fiat Chrysler recalls that NHTSA investigated can be found here: safercar.gov/rs/chrysler/index.html. Owners of any vehicle can look to see what, if any, recalls apply to their vehicle by entering their vehicle identification number at this NHTSA Web site: vinrcl.safercar.gov/vin/


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