FCA faces scrutiny in 20 recalls
The National Highway Traffic Safety Administration is summoning Fiat Chrysler to Washington, D.C., July 2 to explain, in an unprecedented public hearing, its handling of 20 recall campaigns covering more than 10 million vehicles since 2013.
The highly unusual action comes after NHTSA has raised sweeping concerns about Fiat Chrysler’s conduct in auto safety issues.
NHTSA Administrator Mark Rosekind said Monday the agency has “significant concerns” about the automaker’s performance.
“Our concerns are broader than one recall,” Rosekind said.
“We need to determine if there is a pattern here that presents a significant safety hazard.”
The public hearing, at which the government and Fiat Chrysler (FCA US LLC) can call witnesses, is the first for the auto safety agency since 2012, when it demanded that a small manufacturer of three-wheel vehicles fix its products. And it is the first ever to focus on a series of recalls by one automaker.
After the hearing, NHTSA could order actions to speed fixes or order the automaker to buy back vehicles believed to be unsafe. It also could hand down tens of millions of dollars in fines.
But Fiat Chrysler could appeal, and the agency would have to go to federal court to compel it to take action.
Fiat Chrysler could face harsh scrutiny and painful testimony at the hearing in Washington. NHTSA is likely to call investigators to testify about problems in the 20 recall campaigns. Members of the public are likely to testify and could bring graphic photos of loved ones killed in crashes; they also will be able to submit written testimony.
It marks the latest battle between NHTSA and Fiat Chrysler over the last two years. Conflicts date to the government’s demand for the recall of 2.7 million Jeeps linked to more than 50 deaths due to gas tank fires that have occurred when SUVs are hit from behind. In recent months, the agency has questioned a growing number of Fiat Chrysler actions.
Clarence Ditlow, executive director of the Center for Auto Safety lobbying group, praised the move.
“NHTSA has gotten fed up with Chrysler delaying recalls and their attitude that if someone dies waiting, that’s too bad,” Ditlow said. “This move is great news for consumers. ... There’s a pattern within Chrysler that treats recalls as trivial items.”
Fiat Chrysler defended its conduct. “The average completion rate for FCA US LLC recalls exceeds the industry average and all FCA US campaigns are conducted in consultation with NHTSA,” FCA US LLC said. “The company will cooperate fully.”
NHTSA on Monday also issued an order compelling the automaker to answer detailed questions about its performance in recalls.
The 12-page order demands answers on 20 separate recall campaigns dating back to 2013, including all reports of fires, crashes and deaths; repair bulletins sent to dealers; and all lawsuits related to recalls. The automaker must respond by June 1.
Fiat Chrysler must provide a sworn statement under oath from a senior official attesting that a search for all documents has been made. It also must describe in detail what it has done to get as many recall repairs completed as possible.
NHTSA stricter with automakers
Monday’s action is the latest example of NHTSA taking a much tougher line with automakers. Rosekind recently personally demanded Ford Motor Co. expand a recall. And he sent a direct message to top executives at automakers that the agency wants to see improvements in recall completion rates and in responding to safety concerns.
As a result of General Motors Co.’s delayed 2014 recall of 2.6 million vehicles for ignition defects now linked to 104 deaths and 191 injuries, NHTSA came under harsh criticism. It since has taken a much harder stance, imposing more than $125 million in fines on major automakers who delayed recalls over the last year.
Rosekind has convened an industry meeting on recalls and plans a summit with auto CEOs later this year on improving performance. Despite that, there is less interest from Congress than before about auto safety. Congress hasn’t agreed to proposals from the Obama administration to ramp up auto safety spending or to give NHTSA new authority or higher penalties.
The administrator said last month that he had asked a team assigned to review Fiat Chrysler’s actions to present him with options with which to respond. Monday’s move was among those options. He telephoned Fiat Chrysler’s top safety official, Scott Kunselman, to notify him of the action early Monday.
“We will use all available tools to address these (recalls) to improve performance,” Rosekind told reporters.
Recall response found lacking
The last straw leading to the hearing appears to be that Fiat Chrysler — after getting a letter from NHTSA in November demanding urgent action to fix recalled Jeeps at risk of gas tank fires — fixed only a few thousand vehicles. The agency noted that the company repaired just 7,700 more vehicles in the three months ending March 31.
Fiat Chrysler fixed 126,000 vehicles in the last three months of 2014. It fixed 133,000 in the first three months of 2015 — just 7,700 more in the quarter. The government says that pace that wasn’t good enough.
As of March 30, Fiat Chrysler said of the 1.56 million-vehicle recall that 320,000 have been fixed since August 2014. Another 536,000 owners are listed as unreachable, leaving at least 700,000 unrepaired or inspected vehicles. NHTSA says just 21 percent have been fixed.
Last year, the agency repeatedly demanded that Fiat Chrysler accelerate repairs and do more to notify owners. In a letter to CEO Sergio Marchionne in November, NHTSA Deputy Administrator David Friedman wrote that “Chrysler’s delay in notifying consumers and taking other actions necessary to address the safety defect identified is unacceptable and exacerbates the risk to motorists’ safety.”
Fiat Chrysler has taken an aggressive approach as well. Marchionne said in January that the auto industry may have “overreacted” to some safety issues, especially the massive air bag recalls, which may have been “overkill,” he said.
NHTSA issued a consumer advisory in November that urged owners of the recalled Jeeps to get them fixed immediately. The letter came days after a 23-year-old pregnant woman from Ferndale died in a fiery crash on the Lodge freeway in a recalled 2003 Jeep Liberty. Kayla White was killed when her Jeep was struck from behind at high speed, causing it to overturn and catch fire. She died of burns and smoke inhalation, an autopsy found.
It came after a Georgia jury found Fiat Chrysler at fault in a gas tank fire in a 1999 Jeep SUV that killed a 4-year-old boy and awarded his family $150 million. Rosekind told reporters that one reason for the public hearing was the fact that Fiat Chrysler dealers have only completed about 21 percent of the repairs — and repaired just 7,700 vehicles in the three months ending March 31 compared to the previous quarter.
The agency said Monday it will not reopen that probe.