Record Fine for Fiat Chrysler

27 Jul 2015 | Author: | No comments yet »

Fiat Chrysler to buy back 500,000 Ram pickups; biggest such action in US history.

The National Highway Traffic Safety Administration slapped the Italian-U.S. company with the financial penalty and assigned an independent monitor to audit the company’s recall processes for up to four years as part of a sweeping settlement unveiled Sunday evening. The trucks, which are the company’s top-selling vehicle, have defective steering parts that can cause drivers to lose control, and some previous repairs have been unsuccessful. Fiat Chrysler will have to pay $70 million up front and steer an additional $20 million to industry outreach efforts such as educating manufacturers on meeting legal safety obligations and encouraging suppliers to alert the company to possible defects.

Also, owners of more than a million older Jeeps with vulnerable rear-mounted gas tanks will be able to trade in their vehicles for more than market value or be paid to get them repaired, the agency said in a statement. Regulators said Fiat Chrysler violated federal law governing motor-vehicle safety on a variety of fronts. “This civil penalty puts manufacturers on notice that the Department will act when they do not take their obligations to repair safety defects seriously,” U.S. Fiat Chrysler’s fines are tied to legal violations in three areas: misleading and obstructing regulators; inadequate and lagging repairs; and failing to alert car owners to recalls in a timely manner.

With 1.56 million recalled Jeeps linked to fires, the agency has accused Fiat Chrysler of lagging in installing trailer hitches on the backs of vehicles for added protection in lower-speed collisions. The agency’s actions come less than a month after it held a rare public hearing to detail problems with 23 Fiat Chrysler recalls covering more than 11 million cars and trucks.

At the July 2 hearing, NHTSA 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. At a hearing before regulators in early July, the executive in charge of vehicle safety and regulatory compliance outlined measures the company has taken to improve its handling of safety problems and said NHTSA raised legitimate concerns. The penalties come days after regulators separately started probing Fiat Chrysler’s handling of recalled vehicles with possible cybersecurity flaws, after hackers commandeered controls of a moving Jeep. GM and Takata Corp. 7312 -1.25 % of Japan face Justice Department probes for deadly flaws with ignition switches and rupturing air bags, respectively.

NHTSA Administrator Mark Rosekind, who took over in December, has decried what he views as an auto industry that reacts to defects instead of taking a proactive approach. Rosekind has faced resistance on requests for an increased budget from lawmakers who want auto-safety regulators to first undergo reforms, after a Transportation Department inspector general’s report found problems with how the agency polices car companies.

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