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William Maley

Chrysler News: FCA Gets Hit With A $105 Million Fine Over Jeep/Ram Recalls

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he National Highway Traffic Safety Administration (NHTSA) and Fiat Chrysler Automobiles (FCA) have entered a consent agreement that will see FCA paying a record $105 million civil penalty after the Government investigated 23 different recalls into the company since 2009.

 

“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. This civil penalty puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously,” said Transportation Secretary Anthony Foxx.

 

As part of the consent agreement, FCA admitted that it "failed to timely provide an effective remedy” in three recall campaigns, and that it failed to comply with “various reporting requirements” of U.S. laws governing recalls in a timely manner.

 

The $105 million civil penalty is made up of a $70 million payment to NHTSA, $20 million to revamping their efforts in terms of safety, and $15 million in additional penalties if FCA doesn't meet the terms. Along with the penalty, FCA will also have to buy back more than 500,000 vehicles - mostly Ram trucks - due to defective suspension parts that could cause drivers to lose control. Also, owners of Jeep Grand Cherokee and Liberty SUVs with rear-mounted gas tanks will be able to trade their vehicles for above-market value or take a take a “financial incentive” to have a trailer hitch installed.

 

The final part of the agreement will see FCA bring in a independent monitor that will monitor issues at the company for the next three years.

 

"We are intent on rebuilding our relationship with NHTSA and we embrace the role of public safety advocate. 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," FCA said in a statement.

 

Source: The Detroit News, Fiat Chrysler Automobiles

 

Press Release is on Page 2


 

FCA US Reaches Consensual Resolution of NHTSA Investigation on 23 Recall Campaigns

 

July 26, 2015 , London, UK - FCA US LLC (FCA US) today announced it has entered into a consent order with the National Highway Traffic Safety Administration (NHTSA) which resolves the issues raised by NHTSA with respect to FCA US’s execution of 23 recall campaigns in NHTSA’s Special Order issued to FCA US on May 22, 2015 and further addressed at a NHTSA public hearing held on July 2, 2015. The consent order includes an admission by FCA US that in three specified campaigns it had failed to timely provide an effective remedy, and that it did not timely comply with various reporting requirements under the National Traffic and Motor Vehicle Safety Act of 1966.

 

Pursuant to the consent order, FCA US has agreed to make a $70 million cash payment to NHTSA and to spend $20 million on industry and consumer outreach activities and incentives to enhance certain recall and service campaign completion rates. An additional $15 million payment will be payable by FCA US if it fails to comply with certain terms of the consent order.
FCA US has also agreed to undertake specific actions to improve its recall execution. The consent order will be supervised by an independent monitor and will remain in place for three years subject to NHTSA’s right to extend for an additional year in the event of FCA US' noncompliance with the consent order.

 


FCA US LLC Consent Order Response

 

July 26, 2015 , Auburn Hills, Mich. - FCA US LLC acknowledges the admissions in its Consent Order with the National Highway Traffic Safety Administration. We also 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. 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.


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One would hope that the 70 million will go towards increasing the number of NHTSA employees so that they can avoid having to point fingers when they overlook stuff and need to save face later.

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One would hope that the 70 million will go towards increasing the number of NHTSA employees so that they can avoid having to point fingers when they overlook stuff and need to save face later.

 

Agreed.  It also took them years to catch not only this, but the GM ignition issues, the Ford ignition issues of the 90s, and all the Toyota and Honda issues and the disaster that is the Takata airbag issues. 

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NHTSA sounds about on par with the DOE - complete waste of taxpayer dollars

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It is the bane of government-sponsored watchdogs: they are appointments, not hirings.

I'm not even saying that Mopar is without fault here. But NHTSA doesn't exactly have a lot of cred anymore in my books. Hearing that a good portion of that fine is going directly to them just cements my cynicism. What, next time they're in the red they'll magically conjure up another massive recall notice?

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soooo... a government agency fines a company for "jeopardizing" their customer's safety and then turns around and pockets 66% of it for themselves? shouldn't that money go to the families or to the customers themselves in some shape or form. I saw where in the article they will have the opportunity to trade up, but it irks me to see an agency level a fine and then pocket the money with no real demonstration of what it will do with it.

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Holy buckets that's one heck of a fine..

 

Any gov agency is corrupt if you ask me.. It's just what level of corruptness.

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Well, they fined Honda 70 mil for similarly large oversights, supposedly. So I'm guessing they're pretty corrupt.

I was discussing this elsewhere when some hysterical old biddy crawled out of the woodwork to lambaste me for buying a Ram. After I let him flail away for a bit I pointed out to the intelligent posters that this was an industry-wide issue. IMO it's a mix of customers bringing a Wal-Mart mentality to car-shopping leading to automakers cutting costs any which way they can, while NHTSA plays the role of Roscoe P. Coltrane.

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Then there is the irony that most of the failed systems are in cars because of government requirements.  Airbags for safety and electric steering to help meet epa requirements for example.  Then, WHY do we have to be driving computers on wheels? 

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I've long felt that gas tank recall was stupid, because at the time those vehicles were manufactured they conformed to the safety requirements of the day. Now a decade later they suddenly aren't. These vehicles aren't exploding left and right.

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The actual penalty at the moment is $90 Million with an additional $15 Mil if they don't update their ways soon. The thing that everyone missed was 

 

 

 

FCA will also have to buy back more than 500,000 vehicles - mostly Ram trucks - due to defective suspension parts that could cause drivers to lose control.

 

 

That is a real penalty if it comes to fruition. 500,000 at a market value of $10K would be a cool $5 Billion, and another reason why every manufacturer on the planet sees Sergio's number come up on caller ID and hits the "End" button sending that $h! straight to VM

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Yeah, FCA's ****ed up the arse by this recall, and even more so because they have to buy back half a million trucks. 

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a HALF A MILLION TRUCKS!!!  

 

 

That almost negates gains in truck market share for 2014 and part of 2013

And you are leaving out an important part of the article......  stating THEY CAN FIX AND RESALE THESE TRUCKS SO THE HIT ISN'T GOING TO BE NEARLY WHAT IT APPEARS!

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a HALF A MILLION TRUCKS!!!  

 

 

That almost negates gains in truck market share for 2014 and part of 2013

And you are leaving out an important part of the article......  stating THEY CAN FIX AND RESALE THESE TRUCKS SO THE HIT ISN'T GOING TO BE NEARLY WHAT IT APPEARS!

 

 

 

It is. pulling in 500,000 vehicles is a chore for any manufacturer

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The consumer also isn't forced to sell their vehicle back. Because they would likely need to up their payment to get a new vehicle to replace their old one I don't see all 500,000 selling them back. Now if they are just pissed off about the situation and want to get out of their Ram and switch to a Ferd or Chervy, I see that the more likely situation for them selling back to the manufacturer. Because, like Casa said, if they are only getting 10k(their purchase price minus depreciation is what the buyback price is) then they can't get $h! for that price and will still need to throw down nearly 30k(that is only at 10k - I doubt many have depreciated that low.) Trucks hold their value pretty well. Actually, would this cause them to depreciate even more?

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Exactly, I would be surprised if the end up buying back 1/4 of the trucks recalled.  This is not like the Toyota frame recall on Tacomas where they bought back trucks that simply could not be made safe.  What they do buy back will be fixed, probably resold under factory certified which generally brings in even more money, and the hit is going to be minimal.  Also, does anyone know if this only covers original owners or will it cover someone who bought them used?

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Ya. The half-million potential buybacks won't actually become a half-million buybacks. NHTSA may be a bunch of wombats, but they have enough sense to know not to drive a global automaker out of the marketplace... hopefully they remember Audi anyhow :(

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They are only buying back those that aren't fixed at this time. So less than 40% that aren't fixed out of the total number. And even then this is a dealers wet dream to sell sell sell!

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They are only buying back those that aren't fixed at this time. So less than 40% that aren't fixed out of the total number. And even then this is a dealers wet dream to sell sell sell!

 

 

 

But isn't 40% of 500,000 still a whopping 200,000 X $10K equaling $2 Billion? Good thing Sergio stole that $2 Billion from GM back in 2002. 

 

Seriously wish this would put them out of business. Hate Foreign companies. Would love GM being able to pick up Jeep for pennies on the dollar

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They are only buying back those that aren't fixed at this time. So less than 40% that aren't fixed out of the total number. And even then this is a dealers wet dream to sell sell sell!

How is it a dealer's wet dream? They aren't buying them back at a trade-in price(where there is plenty of room for profits). They're buying them back at retail prices, right? price paid - depreciation. They will have to try and resell above market value.  

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They are only buying back those that aren't fixed at this time. So less than 40% that aren't fixed out of the total number. And even then this is a dealers wet dream to sell sell sell!

 

 

 

But isn't 40% of 500,000 still a whopping 200,000 X $10K equaling $2 Billion? Good thing Sergio stole that $2 Billion from GM back in 2002. 

 

Seriously wish this would put them out of business. Hate Foreign companies. Would love GM being able to pick up Jeep for pennies on the dollar

 

uh huh, as I have said, hating a company just to hate it....  And you are still ignoring these trucks will be resold which is going wipe a VAST majority of that price out.  PLUS, the customer DOES NOT have to sell back and many won't because the depreciated price will be nowhere what it will take to get a new and equal replacement.    

 

You should also watch your wishing because how long is it until the government starts forcing GM to buyback all those millions of cars with faulty ignitions that aren't fixed yet?  This is a VERY dangerous precedent that is set...........

Edited by Stew

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It's fun seeing Casa go off a little on FCA.. :thumbsup:

He does get excited... but I do kinda get it. Even though he's got some serious warts to his managerial style and is way too fond of black turtlenecks, I gotta go to bat for ol' Sergio because he's Italian/Canadian.

Having said that, the buyback thing is a scary precedent. And on a financial news front: the rumoured shotgun wedding with GM would be a disaster for both companies.

Edited by El Kabong

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