Daily Management Review

Auto Manufacturing Company Fiat Chrysler Slapped Biggest Ever Fine Over Failed Recalls


07/27/2015




Auto Manufacturing Company Fiat Chrysler Slapped Biggest Ever Fine Over Failed Recalls
In the biggest ever fine for failing to recall defective vehicles, the National Highway Traffic Safety Administration of the United States slapped a fine of $105 million on Fiat Chrysler.
 
The company would have to the amount against 23 safety recall failure that includes a potentially deadly gas tank fault in older Jeeps.

The previous highest recall penalty amount in the US automotive history was slapped against Honda a year ago by the National Highway Traffic Safety Administration. Honda was penalized $70 million for defective airbags.

The department announced that the part of an agreement with Fiat Chrysler would allow some customers to sell their affected vehicles back to the auto-maker.

In an official press release, Transportation Secretary Anthony Foxx said: “Today's (27th July) 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".

The department also hopes that the penalty would send a message to other vehicle manufacturers that “the Department will act when they do not take their obligations to repair safety defects seriously”.
More than 11 million vehicles manufactured by the American-Italian auto-maker would be recalled through 23 recalls.  

The announcement was also quite critical about the auto manufacturer and noted that millions of its customers, and the driving public were put at risk by the pattern of poor performance by Fiat Chrysler.

“This action (penalty) 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,” said NHTSA Administrator Mark Rosekind.

To ensure that this vehicle recall goes on smoothly and according to the directions of the deportment, independent monitoring of the process would be done. This independent monitoring would be an ongoing process and would continue for a period of three years, officials at the National Highway Traffic Safety Administration said.

Though it was not clearly indicated how the fine of $105 million would be divided among the 23 recalls ad the 11 million vehicles planned to be bought, the company would also have the opportunity to recoup some of the money if certain conditions are met.

Most of the vehicles that would be bought back by the company include Ram pickups that were reported to have defective suspension parts which had the potential to cause the vehicle to lose control. In the case of more than a million Jeeps that are prone to deadly crash-impact fires, the owners of the vehicles would have the option to sell off their jeeps at values above its market value or get the vehicles repaired at the company’s cost.  

2014 had been the worst year for US car manufacturers as the automakers had to recall more than 64 million vehicles which was the highest ever vehicle recall ever. This included the recall of general Motor’s deadly ignition switch defects and Takata’s faulty airbags.

The company would have to spend $70 million in cash as civil penalty and an agreement to spend $20 million improving its recall process. If it commits any further violations, it can be fined an additional $15 million, under the terms.

(Source:www.upi.com, www.forbes.com & www.independent.co.uk) 






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