NHTSA Announces in Safety Hearing that Fiat-Chrysler will be sanctioned for Recalls

7/5/2015

For the first time in nearly three years, the National Highway Transportation Safety Administration (NHTSA) conducted a public hearing on Thursday, July 2^nd. In the hearing, the agency scrutinized Fiat-Chrysler’s handling of 23 recalls involving 11 million vehicles. Acting director of the agency’s Office of Defects Investigation (ODI), Jennifer Timian, began the hearing by naming several recall campaigns involving gas tanks exploding upon rear-end impact, ignition-switch defects, as well as defective airbags, in which notifying customers and fixing in a timely matter have remained problematic. NHTSA chief Mark Rosekind, who had already “tentatively concluded” that the automaker has failed to live up to federal requirements involving defects and recalls, announced that he will sanction Fiat-Chrysler with fines and other penalties, perhaps as early as later this month. Representing the company, Fiat-Chrysler vice president for auto safety Scott Kunselman acknowledged some degree of culpability, however noting that, “We have learned from our mistakes and missteps.” Last Sunday, the company issued an emergency recall of 65 Dodge Durango and Jeep Cherokees over a faulty suspension component in which owners were instructed to stop driving immediately until inspectors could examine the vehicles at their homes. The pre-emptive measure was likely conducted to exemplify the company’s progress in the wake of the upcoming hearing.

Among the recall failures noted by the NHTSA has been the controversial response to the gas tank issue in late-model Jeep Liberty and Grand Cherokee vehicles. The NHTSA conducted a lengthy investigation into the issue, eventually coming to an agreement with Fiat-Chrysler on a makeshift solution in which trailer hitches were added to the bumper in order to lengthen the distance between the rear and the fuel system. The company has recalled over 1.5 million of the vehicles over the issue in the past two years, yet as of April 30^th, they have only made roughly 320,000 repairs. Clarence Ditlow, executive director of the Center for Auto Safety says, “This is the recall Chrysler never wanted to do, so manufacturers know that if you don’t repair you have to buy back the vehicles.” Over 50 deaths have been attributed to the gas tank defect, including the gruesome and controversial death of 4 year-old Remi Walden, who was burned alive in Georgia riding in his aunt’s 1999 Grand Cherokee after being rear-ended.

NHTSA Vehicle Integrity Division head Scott Yon said in the hearing that progress in the matter was “not in line with either Fiat Chrysler’s own projections or NHTSA’s expectations in the Jeep recall.” Yon testified that, “In my experience, Fiat Chrysler’s recall performance often differs from that of its peers. Fiat Chrysler takes a long time to produce the parts needed to get vehicles fixed. Their dealers have difficulty getting parts for recalls. Their customers have trouble getting recall repairs done. Fiat Chrysler’s recall remedies sometimes fail to remedy the defects they are supposed to fix.” Yon also noted that it even took the automaker six months after the gas tank recall to select a hitch supplier for the solution. Likely depending on Fiat-Chrysler’s response to the hearing, the company could face the maximum $35 million penalty for each of the recall failures, totaling to over $700 million. Additionally, the company could be forced to buy back the vehicles that it has not corrected in a timely matter. This comes in addition to the many wrongful death and personal injury cases, including a $150 million judgment against the company stemming from the Remi Walden death.

Although the gas tank issue dominated the hearing, The NHTSA also grilled the company about a part supply shortage on replacement tie-rods for a million Dodge Ram trucks, as well as waiting up to five months before notifying customers about the dangers involving Takata airbags. An estimated 2.9 Fiat-Chrysler vehicles are affected by the Takata recall. Although Takata only agreed to the recall last month, the NHTSA had been fighting with the airbag manufacturer since last December when Rosekind assumed the top position. The 33.8 million airbag recall, in some estimates, is the largest in auto history. Although Rosekind has generally followed through on his promise to be more proactive and aggressive as the head of the NHTSA than his predecessors, a recent Department of Transportation Inspector General’s report excoriated the department for lax handling of recall investigations, including probes of Fiat-Chrysler. Among the criticisms has been the delay in communicating to vehicle owners which specific makes and models contain Takata airbags. Both Rosekind and Transportation Secretary, Anthony Foxx has called the Takata recall “the most complex in U.S. auto history.” The vast majority of the criticisms in the report, however, stem from the pre-Rosekind era. The current NHTSA chief has enthusiastically accepted the Inspector General’s recommendations, vowing to implement each of them by the report’s June 1^st, 2016 deadline.

Sources:

Crain’s Detroit Business – Associated Press/Ryan Beene (Automotive News)

Detroit Free Press/USA Today – Todd Spangler and Nate Bomey (USA Today)

Reuters – David Morgan