Fiat Chrysler’s Very Bad, Very Expensive Week

Fiat Chrysler has had a very expensive last week after it voluntarily recalled over 3 million vehicles, was ordered to buy back half a million defective pickup trucks and was assessed the largest-ever fine against an automaker in U. S. history.

3.1 million vehicles recalled over defective software and airbags

On July 24, 2015, Fiat Chrysler voluntarily recalled 1.4 million vehicles for security software updates after two researchers successfully hacked into a newer model Jeep Cherokee through the vehicle’s information and entertainment dashboard, and took over the braking and steering components of the vehicle. Many have voiced concern about when hackers would be able to take over vehicles because of the extensive computer systems and apparently, that time is now.

Vehicles subject to recall over defective software include:

  • Dodge Viper, 2013 -2015 models
  • Ram 1500, 2500 and 3500 model pickup trucks, 2013- 2015
  • Ram Chassis Cabs, 2013 – 2015
  • Jeep Grand Cherokees and Grand Cherokee SUVs, 2014 – 2015
  • Dodge Durango SUVs, 2014 -2015
  • Chrysler 200s and 300s, 2015 model
  • Dodge Charger, 2015 model
  • Dodge Challenger sport coupe, 2015 model

Fiat Chrysler also recalled 1.7 million 2012 to 2014 Ram pickup trucks to repair air bags that deploy without warning.

NHTSA assesses largest fine ever against an automaker

Over the weekend, the NHTSA announced a $105 million fine, the largest ever against an automaker, for Fiat Chrysler’s sloppy handling of an earlier recall involving its Jeep Grand Cherokee and Jeep Liberty models, and for its consistently poor handling of 22 other recalls involving over 11 million vehicles. Investigators found a pattern of laxity by Fiat Chrysler in ordering recalls, in communicating to affected vehicles owners, dealers and to safety investigators, and in timely repairing recalled vehicles. “Fiat Chrysler’s pattern of poor performance put millions of its customers, and the driving public, at risk,” said NHTSA Administrator Mark Rosekind.

Consent Order outlines fine and agreement

In its Consent Order with the NHTSA, Fiat Chrysler admitted it committed safety violations by failing to order timely recalls and complete, to notify affected owners and dealers of safety problems, and to keep federal safety regulators informed of safety problems with its vehicles. Fiat Chrysler agreed to pay $70 million for failing to effectively follow through with the above-mentioned 23 recalls; agreed to pay another $20 million toward vehicle buy-backs and restructuring to improve performance standards; and consented to a possible additional $15 million in fines if independent monitors find no improvement in recall and repair procedures.

It also agreed to independent monitoring and regular oversight over the next three years regarding its handling of vehicle recalls.

Through the Consent Order, the NHTSA also ordered Fiat Chrysler to buy back several hundred thousand pick-up trucks with defective suspensions. Fiat Chrysler must offer to buy back Ram pick-up trucks made between 2008 and 2012, which may have defective steering parts that could cause a driver to lose control of the vehicle. The cost of this buyback could run into the billions.

NHTSA plays hardball

After being repeatedly criticized for its own lax enforcement of automaker rules and regulations, the NHTSA continues to demonstrate with its recent imposition of fines and penalties on automakers and parts manufacturers that it plans to be more aggressive when it comes to vehicle safety enforcement. U.S. Transportation Secretary Anthony Foxx said Monday, “We are sending an unambiguous message to the industry. If you skirt the laws or violate the laws, we are going to penalize you.” NHTSA Administrator Mark Rosekind explained the record fine was meant to get the attention of the auto industry and convey the message that federal regulators are going to be more aggressive in enforcing safety rules and regulations and that automakers better get on board, or be subject to millions in fines. As Rosekind explained, “our goal is simple—more safety for the driving public.”

Let’s hope automakers finally get the message.