Fiat Chrysler Fined for 105 Million Dollars
Fiat Chrysler Automobiles has agreed to a consent order to pay a $105 million fine, the largest penalty ever imposed by National Highway Traffic Safety Administration (NHTSA), after the U.S. Department of Transportation conducted a thorough investigation on whether or not they delayed acting on safety defects on light trucks and cars. It’s the latest in a series of record-breaking fines, following on the heels of the $70 million fine that Honda Motor Co. paid last year.
In a big effort by the government to stamp out shoddy safety practices by automakers, they issued the consent order as follows:
- Cash fine of $70 million against Fiat Chrysler for failing to execute 23 recalls covering 11 million vehicles.
- Fiat Chrysler must buy back hundreds of thousands of defective vehicles, and pay consumers $100 just to participate in a recall of Jeeps equipped with fire-prone gas tanks.
- Fiat Chrysler must allow an independent monitor to oversee its safety operations for at least three years.
- Fiat Chrysler must fund educational programs on vehicle recalls for consumers, suppliers and other automakers. Some of these programs must address certain industry objectives, including identifying best practices for executing recalls and researching obstacles that discourage consumers from responding to recall notices.
- Fiat Chrysler must spend at least $20 million to satisfy performance requirements, including vehicle buybacks.
- An additional $15 million is to be paid by Fiat Chrysler and put into an escrow account. The money will only go to the U.S. Treasury if an independent monitor finds additional safety-law violations or the company fails to live up to the agreement.
In a statement, U.S. Administrator Mark Rosekind said, “Fiat Chrysler’s pattern of poor performance put millions of its customers, and the driving public, at risk. This action will provide relief to owners of defective vehicles, will help improve recall performance throughout the auto industry, and gives Fiat Chrysler the opportunity to embrace a proactive safety culture.”
Regulators hope the long list of fines and requirements is a big step toward the improved safety across the automobile industry. NHTSA is working hard to change public view that they aren’t responding quickly enough to reports of defective automobile parts, in particular the failed General Motors Co. ignition switches that caused air-bags to lose power and malfunctioning air-bags supplied by Takata Corp. that could explode and propel shrapnel toward front-seat occupants.
A spokesperson for Fiat Chrysler said, “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.”
Besides the fines, Fiat Chrysler has been ordered to allow owners of more than a million affected Jeeps to trade in their vehicle for more than market value or receive a financial incentive to get it fixed.
Fiat Chrysler must notify vehicle owners eligible for buy-backs and financial incentives about their options. The buy-backs are being offered on various Ram models from the 2003 to 2012 model years, plus some Aspen, Dakota, and Durango models.