Federal regulators vowed to continue an unprecedented crackdown
on car makers when uncovering significant safety lapses, a day
after unveiling a record $105 million fine and other sweeping
penalties against Fiat Chrysler Automobiles NV for mishandling
recalls.
U.S. Transportation Secretary Anthony Foxx on Monday said he was
encouraged by ongoing dialogue with auto makers on safety problems
and the implications of cutting-edge technology on the road to
driverless cars.
"But it doesn't mean that if we find ourselves in a situation
where enforcement action is necessary that we will not do
everything we can," Mr. Foxx said. "This is what we're supposed to
do."
The National Highway Traffic Safety Administration, under fire
from lawmakers and others for failing to spot safety problems, is
negotiating settlements with increased penalties for auto
manufacturers.
For Fiat Chrysler, the $105 million penalty represents roughly
the same amount as the company's most recent quarterly earnings and
comes as the auto maker hunts for a merger partner and negotiates a
new labor contract with the United Auto Workers union.
The auto maker also faces $150 million of legal damages stemming
from a jury verdict earlier this year in a trial over a fatal Jeep
fire, though the monetary award could be reduced.
The $105 million regulatory penalty includes $15 million that is
deferred but could become payable if Fiat Chrysler violates terms
of a consent order or federal law.
In addition to the record financial penalty against Fiat
Chrysler, regulators will assign an independent monitor to audit
the company's recall processes for up to four years and in some
instances require vehicle repurchases, a rare punishment.
Regulators hit the auto maker with a maximum $35 million fine for
three broad transgressions: misleading and obstructing regulators;
inadequate and lagging repairs; and failing to alert car owners to
recalls in a timely manner.
NHTSA Administrator Mark Rosekind likened the
independent-monitor condition to one imposed in 2014 by the Justice
Department on Toyota Motor Corp. of Japan in a criminal case over
sudden-acceleration issues.
Mr. Rosekind said a consent order signed by Fiat Chrysler
provides "unprecedented scrutiny" of the Italian-U. S. auto maker's
recall processes. Still, the auto maker could have suffered higher
penalties given the number of scrutinized recalls. Regulators said
they haven't referred the matter to the Justice Department, which
extracted a $1.2 billion penalty in the criminal case against
Toyota.
Fiat Chrysler signed a consent order acknowledging lapses
spanning nearly two dozen recalls affecting more than 11 million
vehicles, including older Jeeps with rear gas tanks linked to
dozens of fatal fires.
The financial penalties top the $70 million assessed against
Honda Motor Co. at the end of last year for lapses reporting
possible safety problems and $35 million General Motors Co. paid in
2014 for failing to notify regulators in a timely manner about
defective ignition switches as required under federal law. Neither
company agreed to an independent monitor in signed consent
orders.
"One of my priorities has been to make NHTSA a much more
muscular agency," said Mr. Foxx, the transportation secretary.
As part of the sweeping Fiat Chrysler settlement, the company
must offer to repurchase many pickup and heavy-duty trucks and
sport-utility vehicles with model years from 2008 to 2012. The more
than half a million vehicles were recalled for suspension problems
that can cause a motorist to lose control.
The repurchases are limited to vehicles that haven't received
repairs under existing recalls. Fiat Chrysler said repairs have
been completed on over 60% of the affected vehicles, leaving less
than 200,000 eligible to be repurchased. The repurchases could
still prove expensive, though Fiat Chrysler has the option of then
reselling them as long they are repaired first.
Fiat Chrysler said any repurchase premiums and sales incentives
involved in the recall campaigns will be credited to the $20
million it agreed to spend on recall outreach. The company said it
doesn't expect a significant financial impact from the
expenditures.
Tim Meroney, a 65-year-old retired police officer who lives
outside Monterey, Calif., within the last two weeks traded in a
2009 Ram pickup after frustrations with repairs at a local
dealership and mechanic. He described recently losing control on a
local highway.
"We're talking about a violent action. My wife wouldn't get in
it anymore," Mr. Meroney said, adding he estimates spending roughly
$4,000 on repairs. "I'm more angry at Fiat Chrysler than I can tell
you without saying four-letter words."
A Fiat Chrysler spokesman declined to comment beyond noting the
repurchase offers on affected vehicles are limited to those that
haven't received recall repairs.
Another more than 700,000 Ram pickups with similar suspension
issues aren't subject to the buyback because of better repair
rates, a NHTSA spokesman said.
With 1.56 million recalled Jeeps with rear gas tanks linked to
deadly fires, Fiat Chrysler agreed to offer cash to spur owners to
visit dealerships for repairs or additional money on top of the
value of a vehicle if they decide to trade it in. The company is
installing trailer hitches for added protection in lower-speed
collisions on the backs of Jeep Grand Cherokee and Liberty SUVs
with model years ranging from 1993 to 2007.
Regulators didn't push Fiat Chrysler to repurchase those Jeeps
because the trailer-hitch fix has demonstrated safety benefits
while repairs to the trucks and SUVs with suspension problems have
been deemed ineffective, Mr. Rosekind, the NHTSA chief, said.
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