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

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.

“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.”

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.

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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.

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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.

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