Auto Regulators Vow to Continue Safety Crackdown

27 Jul 2015 | Author: | No comments yet »

AM Roundup: Record Fine Hits Fiat Chrysler.

Federal regulators vowed to continue an unprecedented crackdown on car makers when uncovering significant safety lapses, a day after unveiling a record $105 million fine and other sweeping penalties against Fiat Chrysler Automobiles FCAU -4.62 % NV for mishandling recalls. Fiat Chrysler has agreed to buy back up to half a million Dodge Ram pickup trucks after some repairs that were performed as a result of recalls proved unsuccessful.

Manufacturers who don’t fix their vehicles will pay a price.” Fiat Chrysler’s penalty and corrective action plan were announced Sunday, following a U.S. The National Highway Traffic Safety Administration said the recalled trucks have defective steering parts that can cause drivers to lose control of the vehicle, the Associated Press reported. The question is at the heart of a federal lawsuit brought by two women who provided eggs to couples struggling with infertility. [WSJ] Boy Scouts to lift ban: The Boy Scouts of America is expected to end its ban on gay adult leaders on Monday, dismantling a policy that has deeply divided organization’s membership. [Reuters] [NYT] Social-Media resists policing: Facebook, Twitter and other social-media companies would have to disclose any content they spot on their networks that could indicate terrorist activity, under some proposed legislation. Transportation Secretary Anthony Foxx on Monday said he was encouraged by ongoing dialogue with auto makers on safety problems and the implications of cutting-edge technology on the road to driverless cars. “But it doesn’t mean that if we find ourselves in a situation where enforcement action is necessary that we will not do everything we can,” Mr. Under the terms of an agreement with the Department of Transportation, Chrysler acknowledged violations of the Motor Vehicle Safety Act’s requirements to repair vehicles with safety defects, after a hearing earlier in the month outlined problems with the auto maker’s execution of 23 recalls covering more than 11 million defective vehicles.

In addition to the Dodge Rams, Chrysler is also allowing consumers to trade in their older jeeps or have the automaker pay for the necessary repairs to fix the rear-mounted gas tanks that could cause fires if the vehicles get hit from the back. Sure, it does in some sense,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “But we generally don’t think that Fiat is an attractive candidate for a merger in any case.” Marchionne has been pushing for consolidation in the auto industry to share the cost of developing new technologies and boost returns. The companies don’t want to play the role of cops. [WSJ] Cleared over Libor: German regulators told former Deutsche Bank AG co-Chief Executive Anshu Jain this month that they no longer suspected he purposely misled German central-bank officials in a private 2012 query about market manipulation, according to a confidential letter reviewed by The Wall Street Journal. [WSJ] But with Fiat Chrysler burdened with 11.4 billion euros in net debt ($12.6 billion) and lacking a large presence in growing Asian markets, automakers including General Motors Co. have passed. The settlement is the latest sign that auto safety regulators are taking a more aggressive approach toward companies that fail to disclose defects or don’t properly conduct a recall.

The auto maker also faces $150 million of legal damages stemming from a jury verdict earlier this year in a trial over a fatal Jeep fire, though the monetary award could be reduced. Fiat Chrysler’s shares fell 6.9 percent to 13 euros in Milan, the biggest drop since Oct. 14 and making it the worst performer on the Euro Stoxx autos and parts index.

The $105 million regulatory penalty includes $15 million that is deferred but could become payable if Fiat Chrysler violates terms of a consent order or federal law. The company also agreed to oversight for the next three years, which includes hiring an independent monitor approved by the NHTSA to assess the company’s recall performance. “There’s nothing more important to all of us here at [Fiat Chrysler] than the safety of our customers and their passengers,” the company said in a statement. “That’s why we’re taking steps to improve not only the way we communicate product recalls, but the number of vehicles customers are bringing to dealerships to have those repairs made.” It has been a bad month of publicity for Chrysler, which sold 1.08 million vehicles in the first six months of 2015, a 6% increase from the prior-year period. Last week, Chrysler had to recall about 1.4 million U.S. vehicles after a Wired story highlighted a security flaw with some of the company’s touchscreen systems that made it possible to remotely manipulate some of the vehicle’s systems through a cyber hack. The settlement includes a $70 million fine, $20 million for outreach to let customers know about the recall and $15 million if the automaker violates any of the deal’s requirements. Dodge Ram models that are being included in the buyback are Ram 1500s from 2009 to 2012, Ram 1500 Mega Cab 4 by 4 from 2008 Ram 2500 4 by 4, 3500 4 by 4, 4500 4 by 4, and 5500 4 by 4 from 2008-2012. 2009 Chrysler Aspen, Dodge Durango SUVs and the Dodge Dakota from 2009-2011 are also among the vehicles that are eligible for buyback.

The company, which initially refused in 2013 to fix Jeeps linked to fire deaths, is required to hire an independent auditor for three years to make sure it no longer delays recalls. NHTSA pushed for the vehicle buy-backs when there was doubt that the recall repairs proposed by Fiat Chrysler might not fix the safety defect, the agency’s head, Mark Rosekind, said Monday. Regulators said they haven’t referred the matter to the Justice Department, which extracted a $1.2 billion penalty in the criminal case against Toyota.

Assuming an average price of $15,000, that could add up to $7.5 billion, representing about 30 percent of Fiat Chrysler’s available liquidity, according to Evercore ISI. In a separate statement, Fiat Chrysler said it accepted the consequences of the agreement “with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us.” NHTSA has been involved in vehicle buybacks in the past, but never one of this size.

According to Kelly Blue Book, a 2010 Dodge Ram 1500 — one of the smaller, less-expensive trucks involved in the recalls — could fetch $20,000 in a dealer trade-in, assuming the truck has 60,000 miles on it and is in “good” condition. As part of the sweeping Fiat Chrysler settlement, the company must offer to repurchase many pickup and heavy-duty trucks and sport-utility vehicles with model years from 2008 to 2012. The agency faced similar complaints over its response to reports that air bags supplied by Takata Corp. could explode, sending shrapnel toward front-seat occupants.

Tim Meroney, a 65-year-old retired police officer who lives outside Monterey, Calif., within the last two weeks traded in a 2009 Ram pickup after frustrations with repairs at a local dealership and mechanic. Earlier this month, the safety agency held a rare public hearing where regulators detailed a litany of shortfalls: failure to notify customers of recalls, delays in making and distributing repair parts and in some cases failing to come up with repairs that fix the problems. Meroney said, adding he estimates spending roughly $4,000 on repairs. “I’m more angry at Fiat Chrysler than I can tell you without saying four-letter words.” A Fiat Chrysler spokesman declined to comment beyond noting the repurchase offers on affected vehicles are limited to those that haven’t received recall repairs.

Another more than 700,000 Ram pickups with similar suspension issues aren’t subject to the buyback because of better repair rates, a NHTSA spokesman said. With 1.56 million recalled Jeeps with rear gas tanks linked to deadly fires, Fiat Chrysler agreed to offer cash to spur owners to visit dealerships for repairs or additional money on top of the value of a vehicle if they decide to trade it in. Regulators didn’t push Fiat Chrysler to repurchase those Jeeps because the trailer-hitch fix has demonstrated safety benefits while repairs to the trucks and SUVs with suspension problems have been deemed ineffective, Mr.

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