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NHTSA Imposes $105 Million Recall Fine on Fiat Chrysler

Motor Trend logo Motor Trend 7/27/2015 Eric Weiner

Following a July 2 hearing in which the National Highway Transportation Safety Administration outlined Fiat Chrysler Automobiles' failures in 23 recalls on 11 million vehicles, the company has agreed to pay NHSTA as much as $105 million in civil penalties. Additionally, Chrysler will buy back more than 500,000 vehicles as part of the consent agreement with the government organization.

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The $105 million fine is made up of a $70 million cash levy,the $20 million Fiat Chrysler Automobiles will need to spend to live up to the consent agreement with NHTSA, and $15 million in potential fines if monitors find Fiat Chrysler has violated U.S. safety law or the consent agreement. As part of the agreement, Fiat Chrysler will be subject to “unprecedented” oversight over the next three years.

2009 Jeep Grand Cherokee© Provided by MotorTrend 2009 Jeep Grand Cherokee “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,” said 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 consent document states that Fiat Chrysler must take decisive and timely action to get defective vehicles repaired or off of the road. As part of this measure, Fiat Chrysler is going to buy back 500,000 vehicles, mostly Ram pickups, with suspension parts that could fail and cause the driver to lose control. For the million-plus Jeep Liberty and Jeep Grand Cherokee owners at risk of deadly fire if the rear-mounted plastic fuel tank is punctured in a rear-end collision, they will be able to either trade in their vehicle for above market value, or be given a financial incentive to bring in the vehicle for repair. The remedy involves fitting the vehicles with a trailer hitch, but in the past Chrysler was slow to manufacture enough hitches to quickly remedy vehicles.

2008 Jeep Liberty© Provided by MotorTrend 2008 Jeep Liberty Fiat Chrysler acknowledged the situation in a statement. “We…accept the resulting consequences with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us. We are intent on rebuilding our relationship with NHTSA and we embrace the role of public safety advocate. Accordingly, FCA US 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.”

NHTSA fined Honda the same $70 million in January, after Honda admitted to failing to report 1,729 vehicle safety information circumstances over more than a decade. For its failures in the ignition switch crisis, General Motors was forced to pay $35 million in fines. No doubt NHTSA is coming down hard as of late to set an example that should encourage manufacturers to be more accountable and responsive to safety recall issues.

Source: NHTSA, Chrysler 2010 Ram 1500 left front 1© Provided by MotorTrend 2010 Ram 1500 left front 1

Sergio Marchionne With NYSE© Provided by MotorTrend Sergio Marchionne With NYSE
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