DETROIT >> Fiat Chrysler must offer to buy back from customers more than 500,000 Ram pickup trucks in the biggest such action in U.S. history as part of a costly deal with safety regulators to settle legal problems in about two-dozen recalls.
The trucks, which are the company’s top-selling vehicle, have defective steering parts that can cause drivers to lose control, and some previous repairs have been unsuccessful. So to get them off the roads, Fiat Chrysler agreed to the buyback, according to the National Highway Traffic Safety Administration. Owners also have the option of getting them repaired, the agency said in documents released Sunday.
Also, owners of more than a million older Jeeps with vulnerable rear-mounted gas tanks will be able to trade in their vehicles for more than market value or be paid to get them repaired, the agency said in a statement. The Jeeps’ fuel tanks are behind the rear axle and have little to shield them in a rear crash. They can rupture and spill gasoline, setting the vehicles on fire. At least 75 people have died in crash-related fires, although Fiat Chrysler maintains they are as safe as comparable vehicles from the same era.
Both the Jeep and Ram measures are part of a larger settlement between the government and the automaker that includes a record $105 million penalty, appointment of an independent recall monitor and strict federal oversight. It’s another step in NHTSA’s effort to right itself, getting more aggressive with automakers after several slow responses to safety troubles.
“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,” Transportation Secretary Anthony Foxx said in the statement. The record civil fine, he said, puts automakers on notice that NHTSA will take action when recall laws aren’t followed.
NHTSA has been involved in vehicle buybacks in the past, but never one of this size. A buyback usually happens when a problem is so serious that it can’t be fixed and the vehicles need to be removed from service. The buyback and the Jeep trade-ins likely will cost Fiat Chrysler hundreds of millions of dollars or more. Fiat Chrysler Automobiles NV, which is technically based in the Netherlands but includes the Italian and U.S. companies, posted first-quarter net profit of $101 million.
The consent order that Fiat Chrysler agreed to requires it to notify vehicle owners who are eligible for buybacks and other incentives.
The agency’s actions come less than a month after it held a rare public hearing to detail problems with 23 Fiat Chrysler recalls covering more than 11 million cars and trucks. It’s another sign that NHTSA is taking a much tougher stance against automakers that don’t obey auto safety laws. 70 million and stuff.
The fine beats the old record of $70 million assessed against Honda Motor Co. for lapses in recalls of air bags made by Takata Corp.
In a statement, FCA US LLC said it accepted the consequences of the agreement “with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us.” The company said it wants to rebuild its relationship with NHTSA and identify and follow best industry practices for doing recalls.
Fiat Chrysler has to pay $70 million and must spend at least $20 million to meet performance requirements detailed in the agreement. Another $15 million could come due if the recall monitor finds any further violations.
At the July 2 hearing, NHTSA detailed a litany of shortfalls: failure to notify customers of recalls, delays in making and distributing repair parts and in some cases failing to come up with repairs that fix the problems. Some of the recalls date to 2013.
During the hearing, Fiat Chrysler did not dispute any of NHTSA’s allegations. Scott Kunselman, the company’s head of vehicle safety, said it is changing the way it manages safety to follow the industry’s best practices. The safety system, he said, has been reorganized with added personnel. He now reports directly to CEO Sergio Marchionne. Previously the person in his position was three rungs down the organization chart from the chief executive, he said.
“We have learned from our mistakes and missteps,” he said.