NHTSA slaps Fiat Chrysler with largest fine in history

The National Highway Traffic Safety Administration levied Fiat Chrysler with largest fine in history for their most recent recall. The NHTSA announced Sunday that Fiat Chrysler would be charged with a $105 million penalty.

Fiat Chrysler’s consent agreement with the NHTSA also contained an unprecedented buyback agreement allowing the owners of well over 1 million vehicles the option of receiving a trade-in or a financial incentive toward repairing their vehicle. They will also have an independent organization monitor their recall efforts over the next three years.

The new fine of $105 million blows past the previous record of $70 million levied against Honda Motor Co. for failing to reports deaths and injuries. General Motors Co. was fined $35 million last year for a delay in reporting 120 deaths due to faulty ignition switches.

The increase in fines is largely due to the new leadership of Mark Rosenkind and pressure from Congress over the organizations handling of defects that led to multiple deaths.

“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,” Rosenkind said.

The recall itself is due to faulty suspensions in vehicles dating back as far as 2008. It covers Dodge Ram, Dakota, Chrysler Aspen, and Jeep SUV’s.

Additionally, the Dodge Ram pick-up trucks have been found to have faulty steering wheels that can cause the driver to lose control.

Fiat Chrysler must offer to buy back 500, 000 of the defective pick-ups.

The fines cover a $70 million cash payment, $20 million dedicated toward improving the recall process, and another $15 million payable in the event that further violations are found.

The NHTSA’s report catalogued 23 incidents where Fiat Chrysler was misleading about recall information. The two organizations have had a contentious past. Fiat Chrysler has gone so far as to threaten lawsuits against the NHTSA to avoid mandatory actions.

However, Fiat Chrysler Chief Executive Sergio Marchionne now seems intent on changing the company’s position toward dealing with regulators.

“We are intent on rebuilding our relationship with NHTSA,” the automaker said on Sunday.

What Fiat Chrysler did not address is how they expect the public to react to the large swath of recalls. According to Edmunds, Fiat Chrysler is already ranked fourth behind GM, Ford, and Toyota. If the recall were to cross another slide that would put them in fifth place behind Honda.

[Reuters]

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