Fiat Chrysler Hit with Record $105 Mil Fine Over Mishandled Recalls

Maker also will offer buybacks and trade-in discounts.

by on Jul.27, 2015

A fire involving a Jeep Grand Cherokee. The consent order calls for FCA to speed up the recall of over 1.5 million Jeeps.

Fiat Chrysler Automobiles has agreed to pay a record $105 million in fines due to a series of mishandled recalls, the National Highway Traffic Safety Administration announced Sunday evening. The largest fine ever levied again an automaker, the consent order will also see FCA buy back more 500,000 vehicles due to suspension defects.

The settlement follows what has been described as an “unprecedented” hearing by federal regulators examining allegations that FCA failed to follow federal safety guidelines in 23 separate recalls. In an appearance in Detroit last Monday, NHTSA chief Mark Rosekind warned that the agency may yet examine how FCA handled other safety problems.

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“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,” Transportation Secretary Anthony Foxx said in a statement.

Fiat Chrysler issued its own statement acknowledging the Consent Order, adding that the company does “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,” the company’s statement continued. “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 Administrator Mark Rosekind said he plans to crackdown on automakers and his own agency.

Among other things, Fiat Chrysler will now face at least three years of oversight by an independent monitor it will hire to make sure its future safety actions conform with federal law.

The automaker may not have to pay the entire $105 million fine. The figure includes an immediate $70 million penalty as well as another $15 million that would be levied against the trans-Atlantic maker if it fails to comply with regulations going forward.

(Hidden killers? NHTSA questions whether aging airbags could fail catastrophically. Click Here for the exclusive report.)

An additional $20 million will be spent by the automaker on safety efforts. That’s in line with actions NHTSA has taken with other manufacturers in recent years, Rosekind noted last week.

Fiat Chrysler will buy back more than 500,000 vehicles with suspension defects that could cause a loss of control. The company also will offer financial incentives to help boost the poor response rate to a 2013 recall involving 1.56 million older Jeeps NHTSA determined were at risk of fire in a rear-end collision. So far, only 21% of the vehicles covered by that service action have been repaired. Under the terms of the Consent Order, FCA will also offer some owners cash payments if they trade their older vehicles in on new models.

NHTSA has been cracking down on safety in recent months – accelerating its efforts after Rosekind was sworn in as the agency’s new administrator last December. A former head of the National Transportation Safety Board, Rosekind has said he expects automakers to change the way they approach safety issues. But he also stressed that NHTSA also must address a number of its own problems. The agency was harshly criticized during a Senate hearing called to examine a government audit of NHTSA’s handling of the General Motors ignition switch recall not linked to over 120 deaths.

(No way Americans should tolerate 33,000 annual highway deaths, says NHTSA chief. Click Here for more.)

Rosekind said a goal is to work cooperatively with the companies NHTSA regulates – as long as they live up to federal safety rules. The agency has used consent orders with a number of manufacturers over the last two years, including GM, Honda Motor Co., child seat manufacturer Graco Children’s Products, and heavy-duty truck manufacturers Forest River Inc. and Spartan Motors Inc.

Last January, Honda agreed to a $70 million fine for having failed to properly report a series of safety issues to NHTSA on a timely basis.

The hearing on 23 Fiat Chrysler recalls was described as “unprecedented” by Rosekind. NHTSA has not said whether it will forego further hearings on FCA’s handling of safety matters, something that the safety chief last week said the agency is considering.

During the past week alone, FCA recalled about 3.6 million vehicles, including 1.4 million because they could be vulnerable to hackers, and another 2.2 million trucks due to inadvertent air bag deployments.

(For more on Fiat Chrysler’s hacking recall, Click Here.)

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9 Responses to “Fiat Chrysler Hit with Record $105 Mil Fine Over Mishandled Recalls”

  1. Jorge says:

    Basically NHTSA is using FCA as a scapegoat for NHTSA’s failed performance in properly initiating monitoring recalls. Who gets that $105 Million? If it’s NHTSA then there is certainly a conflict of interest with the system. These massive recalls and NHTSA fines might be enough to put FCA out of Biz with them being cash poor. Time will tell but this fine if paid could be the last straw.

    • Paul A. Eisenstein says:

      Jorge, NHTSA never gets to keep fines. It goes into the general fund.

      And while FCA may complain about the Jeep fire recall of 2013, most folks inside now admit their safety and recall system was seriously flawed.

      Paul A. Eisenstein

      • GT101 says:

        A “general fund” is a black hole used by politicians for political gain. That is a terrible thing to do with fine money.

  2. J Lash says:

    How do you find out if your vehicle is part of the buyback? I have a 2012 Dodge Ram. Every article has said “certain Dodge Ram from 2009 – 2012″. It would be nice to know if it’s mine or not so I can be looking for a notice in mail or something.

  3. McCauley says:

    Are the 2000 Jeep Grand Cherokee beening recalled or are they being bought back?

    • Paul A. Eisenstein says:

      The buyback program covers:
      Campaign 13V-527 — MY2008-12 Dodge and Ram 4500-5500 4×4 Chassis Cab
      Campaign 13V-529 — MY2008-12 Dodge and Ram 2500 4×4, 3500 4×4, 3500 Chassis Cab 4×2; MY2008 Dodge 1500 Mega Cab 4×4
      Campaign 13V-038 — MY2009-2012 Ram 1500; MY 2009-20011 Dodge Dakota; MY2009 Chrysler Aspen and Dodge Durango

      The program aimed at boosting repairs of Jeep Grand Cherokees cover 1993-1998 model-years.

  4. Laquita says:

    What about the 2008 Jeep Compass?

    • Paul A. Eisenstein says:

      No, from my read of the consent order, Laquita. That said, it’s good to go to either the Chrysler or NHTSA websites, enter you Jeep’s VIN and see if it is subject to ANY recall you might have missed.

      Paul A. EIsenstein

  5. I have a 1998Jeep Cherokee and I have a gas leak on my plastic tank and the front end is giving me a lot of steering problems. There are a lot of interior lights not operating and I have replaced the crank sensor and several other sensors as well. The computer is a problem as well. It still Jeep Cherokee and I am tire of spending my money on it continually. I will be glad to get my book value and a trade in on a new Jeep Cherokee as soon as possible. Please me at the number 7708853456 or 7702078851. So I can bring it to your a sign places. Thank you charles Raymond Smith,