NHTSA Has Fined Fiat Chrysler $105 Million After The Car Manufacturer Neglected To Complete 23 Safety Recalls Involving Dodge Pick-Up, Jeeps And Other Chrysler Vehicles.
National Highway Traffic Safety Administration Imposes Larges Civil Penalty by fining Fiat Chrysler $105 million for failing to complete 23 safety auto recalls. The auto recalled involve over 11 million vehicles including Dodge Ram pick-ups and Jeeps. The fine was imposed on Sunday by the NHTSA and is the largest fine ever placed on a vehicle manufacturer. The previous largest fine was a 2014 file against Honda for using faulty air bags with a fine amount of $70 million. According to The New York Times, this increase in the fine indicates the agency’s escalation of efforts to punish automakers who do not fix defective models and complete auto recalls and repairs.
“This civil penalty puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously,” the secretary of transportation told The New York Times. [nytimes.com/2015/07/27/business/fiat-chrysler-faces-record-105-million-fine-for-safety-issues.html, July 2015]
On July 26, Fiat Chrysler admitted to violating the federal rules regarding the auto recalls of its vehicles. In addition to the fine, the NHTSA is requiring that Fiat Chrysler buy back some of the faulty vehicles from customers. The company will also face additional review and monitoring by the NHTSA. “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,” a spokesperson for Fiat Chrysler said in a statement.
According to the settlement details, the car manufacturer will pay $70 million in penalty fees and must spend at least $20 million to meet the performance requirements stated in the consent order. The company will be fined an additional $15 million if a third-party investigator finds any further safety law violations or violations of the consent order. Fiat Chrysler must buy back at least 500,000 vehicles named in the recall. These vehicles have defective suspension systems that can cause drivers to lose control of the vehicle. Over one million Jeep vehicles have been recalled for rear-mounted gas tanks that are prone to fires. Fiat Chrysler was ordered to allow these vehicle owners to trade in their faulty vehicles above market value.
The New York Times speculates that the new aggressive tactics of the NHTSA may be a result of the pressure and criticism the agency has faced from Congress and the Department of Public Transportation. These agencies have criticized the NHTSA for its lax enforcement of recalls and vehicle safety investigations. The agency received the most criticism for its handling of the General Motors ignition switch recall, which allowed over 2.6 million faulty vehicles to drive on the road for over a decade before the recall was completed. 124 or more deaths have been tied to these faulty ignition switches. As a result of the backlash against the NHTSA, the company has increased its investigations for recalls, vehicle manufacturing issues, and other safety practices.
The Fiat Chrysler case is an example of how the NHTSA will likely conduct future investigations. The company made the decision to hold a public hearing focusing on 23 Fiat Chrysler recalls leading back to 2009. During the hearing, complaints stated that the company failed to complete repairs in a timely fashion or even notify vehicle owners of recalls. Fiat Chrysler is fully cooperating with the investigation and hearing and has stated that the NHTSA, “has raised some legitimate questions.”
Since the hearing, Fiat Chrysler has announced several recalls, the largest of which recalled 1.4 million vehicles for a computer system glitch that left the vehicles vulnerable to hackers.
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