US safety authorities have hit Fiat Chrysler Automobiles (FCA) with a record fine and imposed requirements in the wake of a series of recalls.
US transportation secretary Anthony Foxx said the automaker had acknowledged violations of the Motor Vehicle Safety Act’s requirements to repair vehicles with safety defects and would submit to rigorous federal oversight, buy back some defective vehicles from owners and has agreed to a US$105m civil penalty, the largest ever imposed by the department’s National Highway Traffic Safety Administration.
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The enforcement action came after a 2 July public hearing at which NHTSA officials outlined problems with Fiat Chrysler’s execution of 23 vehicle safety recalls covering more than 11m defective vehicles. Fiat Chrysler has since admitted to violating the safety act in three areas: effective and timely recall remedies, notification to vehicle owners and dealers and notifications to NHTSA.
“[The] 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,” said Foxx in a statement.
“This civil penalty puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously.”
FCA responded with a statement: ” FCA acknowledges the admissions in its consent order with the National Highway Traffic Safety Administration. We also 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. 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.”
In the consent order issued by NHTSA, Fiat Chrysler commited to take action to get defective vehicles off the roads or repaired. Owners of around 0.5m vehicles with defective suspension parts that could cause the vehicle to lose control will have the opportunity to sell their vehicle back to the automaker. Owners of around 1m Jeeps 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.
The consent order requires FCA to notify vehicle owners eligible for buybacks and other financial incentives that these new options are available.
The 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.”
The company must pay a $70m cash penalty – equal to the record civil penalty the agency imposed on Honda in January. Fiat Chrysler must also spend at least $20m on meeting performance requirements included in the consent order. Another $15m could come due if the independent monitor discovers additional violations of the safety act or the consent order.
NHTSA has adopted a much tougher stance against automakers since Rosekind joined as administrator. His agency has come under fire from US lawmakers for the way it handled several high profile recalls including those for defective GM ignition switch defects and potentially deadly Takata airbag inflators.
