Foxx in the hen house.
In an unusual Sunday release, U.S. Transportation Secretary Anthony Foxx announced yesterday that Fiat Chrysler Automobiles admits to violations of the Motor Vehicle Safety Act’s requirements to repair vehicles with safety defects.
FCA “will submit to rigorous federal oversight, buy back some defective vehicles from owners, and agreed to a $105 million civil penalty,” which is the largest ever imposed by the Department’s National Highway Traffic Safety Administration.
Fires resulting from accidents are tragic. NHTSA previously approved a proposed Jeep fuel tank recall but now says it wasn’t carried out.
The penalty comes after a July 2 public hearing where NHTSA officials outlined problems with FCA’s conduct of 23 vehicle safety recalls covering more than 11 million defective vehicles.
FCA claimed that it does not expect the cost of providing these negotiated alternatives “will be material to its financial position, liquidity or results of operations.”
Fiat Chrysler admitted to violating the Safety Act in three areas:
- Effective and timely recall remedies,
- Notification to vehicle owners and dealers
- Notifications to NHTSA.
In a consent order issued by NHTSA, Fiat Chrysler will get defective vehicles off the roads or repaired. Owners of more than half a million vehicles with defective suspension parts that could cause the vehicle to lose control will have the opportunity to sell their vehicle back to Fiat Chrysler. Owners of more than a million Jeeps that are prone to deadly fires either will have the chance to trade their vehicle in for above its market value, or will receive a financial incentive to get their vehicle remedied.
FCA must pay a $70 million cash penalty – equal to the record $70 million civil penalty the agency imposed on Honda in January. In addition, Fiat Chrysler must spend at least $20 million on meeting performance requirements included in the Consent Order. Another $15 million could come due if an independent monitor discovers additional violations of the Safety Act or the Consent Order.
In a statement issued today FCA said:
“In the consent order, FCA US has agreed to additional remedies for three recall campaigns covering approximately half a million vehicles, primarily 2008 through 2012 chassis cab, 2009 through 2011 light duty and 2008 through 2012 heavy duty Ram Trucks. In each of those campaigns, FCA US will offer to owners whose vehicles have not yet been remedied, as an alternative remedy, to repurchase those vehicles at a price equal to the original purchase price less a reasonable allowance for depreciation plus 10%.
“However, customers responding to the recall may continue to keep their vehicles and have them repaired in accordance with the original recall. As of this date, repairs have been completed on well over 60% of the subject vehicles, leaving less than two hundred thousand eligible vehicles. As is expressly provided for under the consent order, FCA intends that any vehicles repurchased will be remedied and resold.”
The Italian automaker also agreed to unprecedented oversight for the next three years, which includes hiring an independent monitor approved by NHTSA to assess, track and report the company’s recall performance.
“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.”
(See AutoInformed on: NHTSA Blasts FCA Recalls – Big Fines, Maybe Criminal Charges Coming for Italian Automaker? Litigation Ongoing and Hack Attack! FCA Recalls 1.4m Vehicles Because Outsiders Can Take Control Remotely by Exploiting the Software and Chrysler Finally Agrees to Fix Jeep Fuel Systems after a Long NHTSA Probe and Formal Recall Request)
