Fiat Chrysler faces record $105 million fine over recall lapses

26 Jul 2015 | Author: | No comments yet »

Fiat Chrysler faces $105m fine as US says automaker violated laws in recalls.

Federal regulators are close to hitting Fiat Chrysler with a record $US105 million ($144m) fine for recall lapses covering millions of vehicles, adding to mounting scrutiny of the automaker’s safety practises. Fiat Chrysler Automobiles NV is recalling about 1.4 million cars and trucks equipped with radios that are vulnerable to hacking, the first formal safety campaign in response to a cybersecurity threat. The National Highway Traffic Safety Administration is expected slap the Italian-US company with the financial penalty and assign an independent monitor to audit the company’s recall processes for an extended period as part of a sweeping settlement, according to sources. A settlement could be unveiled as early as Monday and Fiat Chrysler will have an opportunity to recoup some of the penalties if it meets certain conditions, the newspaper said. The company will make payments to owners of 1.56 million recalled older-model Jeeps with gas tanks behind the rear axle to bring them to dealers to install trailer hitches to help protect the tanks.

On Friday, Fiat Chrysler announced it would recall 1.4 million vehicles in the United States to install software to prevent hackers from gaining remote control of the engine, steering and other systems. The government penalties target lapses spanning nearly two dozen recalls affecting more than 11 million Fiat Chrysler vehicles, including older Jeeps with rear petrol tanks linked to numerous fatal fires. Fiat Chrysler was already distributing software to insulate some connected vehicles from illegal remote manipulation after Wired magazine published a story about software programmers who were able to take over a Jeep Cherokee being driven on a Missouri highway.

The fines were tied to legal violations in an array of areas, including misleading and obstructing regulators; inadequate and lagging repairs; and failing to alert car owners to recalls in a timely manner, the sources said. The company, led by Chief Executive Officer Sergio Marchionne, reiterated that it’s not aware of any real-world unauthorized remote hack into any of its vehicles.

It stressed that no defect was found and said it’s conducting the campaign out of “an abundance of caution.” “Launching a recall is the right step to protect Fiat Chrysler’s customers, and it sets an important precedent for how NHTSA and the industry will respond to cybersecurity vulnerabilities,” NHTSA Administrator Mark Rosekind said in a statement Friday. At the 2 July hearing, NHTSA detailed an alarming 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. Under terms of the settlement with regulators, Fiat Chrysler is expected to start offering cash to Jeep owners to encourage them to go to dealerships for repairs or additional money on top of the value of their vehicle if they decide to trade it in.

After the hearing, NHTSA chief Mark Rosekind told reporters that Fiat Chrysler would surely be punished. “There’s a pattern that’s been going on for some time,” he said. Fiat Chrysler’s executive in charge of vehicle safety and regulatory compliance earlier this month outlined measures the company has taken to improve its handling of safety problems and said Fiat could have handled recalls better and that NHTSA officials raised legitimate concerns. Earlier hacks have mostly been achieved by jacking the researchers’ laptops into diagnostic ports inside the cars. “This is not a Sprint issue but we have been working with Chrysler to help them further secure their vehicles,” said Stephanie Vinge Walsh, a Sprint spokeswoman.

NHTSA said it would open an investigation of the remedy “to ensure that the scope of the recall is correct and that the remedy will be effective,” agency spokesman Gordon Trowbridge said in an e-mailed statement. There’s a possibility the recall could affect consumer confidence in Fiat Chrysler, even though the company isn’t the only one with cybersecurity challenges, said Thilo Koslowski, vice president and automotive practice leader at technology consultant Gartner Inc. “It validates that cyber-hacking with cars is a serious issue that the auto industry must pay attention to,” he said. “The auto industry needs to develop new technology to combat these technological problems.” General Motors Co. has a team working on cybersecurity and has hired Harris Corp.’s Exelis and other firms to develop anti-hacking systems, said Mark Reuss, the Detroit automaker’s executive vice president for global product development.

The senators’ bill would also establish a rating system to inform owners about how secure their vehicles are beyond any minimum federal requirements.

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