Fiat Chrysler Automobiles could pay up to $105 million in fines and penalties and must buy back defective vehicles in an agreement with the federal government that will also require an independent monitor to oversee future vehicle recalls.
The automaker may have to buy back more than half a million vehicles with defective suspension parts if owners wish to sell those vehicles back to Chrysler, Fortune reports.
In its agreement with the Department of Transportation, Chrysler acknowledged violations of the Motor Vehicle Safety Act’s provisions requiring repairs to vehicles with safety defects. But National Public Radio (NPR) reports that many of the remedies Chrysler offered did not fix the safety defects. Further, the company failed to give consumers the information they needed to take action on recalls; failed to produce the parts needed to fix defects and to make those repairs available to consumers. A hearing earlier in the month recounted problems with Chrysler’s handling of 23 different recalls covering more than 11 million defective vehicles. Transportation Secretary Anthony Foxx said the agreement with Fiat Chrysler was an example of the “very aggressive” actions that automakers would face for failing to fix unsafe cars. “I think we are going to see the industry taking this issue more seriously,” Mr. Foxx said during a conference call, the New York Times reports.
NPR reports that Fiat Chrysler has abysmal recall compliance rates. Some Jeeps have rear-mounted gas tanks that can catch fire in a rear-end collision, but only 12 percent of owners brought the vehicles in to be fixed after a recent recall. The National Highway Traffic Safety Administration (NHTSA) is requiring the automaker to offer cash incentives to more than a million of the Jeep owners or allow them to trade in their Jeeps at above market rates. These provisions are intended to boost the poor rate of compliance with recalls.
Chrysler has admitted Safety Act violations in three areas: effective and timely recall remedies, notification to vehicle owners and dealers, and notifications to NHTSA. Chrysler is required to pay a $70 million cash penalty. This is equal to the penalty imposed on Honda in January, according to Fortune. Chrysler must also spend at least $20 million on meeting performance requirements laid out by the federal government and the company could be subject to another $15 million if the independent monitor discovers additional violations of the Safety Act. The total in fines and penalties could reach $105 million. Chrysler will be subject to government oversight for the next three years and must hire an independent monitor approved by NHTSA to assess its recall performance.
“There’s nothing more important to all of us here at [Fiat Chrysler] than the safety of our customers and their passengers,” the company said in a statement. Chrysler sold 1.08 million vehicles in the first six months of 2015, a 6 percent increase from the same period last year, but last week Chrysler had to recall about 1.4 million vehicles after a story in Wired revealed a security flaw with some of the company’s touch screen systems that made it possible for cyber hackers to remotely manipulate some of the vehicle’s systems, Fortune reports.