Fiat Chrysler Faces More Penalties
December 10 2015 - 3:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 12/10/15)
By Mike Spector and Eric Sylvers
U.S. regulators are weighing penalties against Fiat Chrysler
Automobiles NV for safety-reporting lapses, said people familiar
with the matter, only months after fining the auto maker for
failures with recalls covering millions of vehicles.
The National Highway Traffic Safety Administration is
considering imposing an approximate $70 million fine and other
measures after the Italian-U.S. car company failed to report death,
injury and other claims to the agency as required under federal
law, one of the people said.
Regulators are aiming to reach a settlement with the company
that imposes penalties before the end of the year, the people said.
Other details of the possible penalties couldn't be learned. A
settlement hasn't been completed, and the terms could change.
Regulators in July uncovered a discrepancy in Fiat Chrysler's
so-called early-warning reporting data. The company later said it
found significant underreporting of deaths, injuries and other
information that must be submitted to regulators under U.S.
law.
The failures resulted from technology issues that prevented
collected data from being sent to regulators, one of the people
said. So far, there is no evidence that the data uncovered any
significant defects in Fiat Chrysler vehicles currently on the
road.
The early-warning-reporting system requires auto makers to
provide regulators with information each quarter about crashes
resulting in deaths and injuries; claims of property damage; and
consumer complaints to help the government identify possible safety
problems.
Honda Motor Co. received a $70 million fine at the end of last
year for failing to submit reports detailing more than 1,700 death
and injury claims for 11 years that in part related to
rupture-prone air bags made by Takata Corp.
For Fiat Chrysler, the potential additional penalties would cap
a year of intense scrutiny from U.S. regulators on a variety of
fronts, including recall lapses and gaps in cybersecurity. The
additional attention comes as Chief Executive Sergio Marchionne is
trying to argue for industry consolidation and seek a possible
merger partner for Fiat Chrysler. His merger overtures to General
Motors Co. have been rejected.
Regulators in July hit the company with a then-record $105
million penalty for recall lapses with millions of vehicles,
including older Jeeps with rear gas tanks involved in fatal fires.
About $15 million of the penalty was deferred but could become
payable if the company violates the settlement's terms or federal
law.
In addition, computer researchers earlier this year demonstrated
an ability to commandeer controls of a newer Jeep, exploiting a gap
in the vehicle's software.
Under pressure from regulators, Fiat Chrysler recalled more than
a million vehicles. The company quickly addressed the problem and
provided fixes to protect the Jeeps from hacking. The company has
said it isn't aware of any hacking incidents involving vehicles
being driven by consumers in real time.
The continuing regulatory scrutiny and recalls increased the
company's reputational and financial risks. Fiat Chrysler so far
this year has recalled more than 11 million vehicles in the U.S.,
more than any other auto maker.
Fiat Chrysler in October said it took a charge exceeding $800
million for future recalls. The company's U.S. arm took a $90
million charge in the second quarter for the July settlement with
U.S. regulators.
Fiat Chrysler faces roughly $40 million in legal damages
stemming from an accident involving an older Jeep with a rear fuel
tank subject to a customer satisfaction campaign after a Georgia
judge reduced the amount levied by a jury. The company has appealed
the case.
Still, Fiat Chrysler has so far avoided the Justice Department
probes and myriad lawsuits that have afflicted Takata and GM over
faulty air bags and ignition switches, respectively.
Auto makers are recalling more than 19 million vehicles in the
U.S. with Takata air bags linked to eight deaths and dozens of
injuries. The company still faces scrutiny from federal prosecutors
and widespread litigation. The company has said it is cooperating
with probes.
(END) Dow Jones Newswires
December 10, 2015 02:47 ET (07:47 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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