US plans to penalize Fiat Chrysler over delayed recalls

David Shepardson
Detroit News Washington Bureau

Washington — The National Highway Traffic Safety Administration said Thursday it plans to penalize Fiat Chrysler Automobiles, after it found sweeping problems with its recalls. It accused the automaker of misleading the auto safety agency.

Penalties could include hefty fines, an agreement requiring significant auto safety reforms — or even ordering Fiat Chrysler to buy back unrepaired vehicles. The automaker could face fines of $35 million in each of the 23 recalls being investigated if NHTSA determines it failed to meet legal requirements.

NHTSA Administrator Mark Rosekind told reporters after a public hearing Thursday that he expects to take action against the automaker before the end of July, if not sooner. Asked if he saw any way the automaker could avoid punishment, he said “no.”

At an unprecedented hearing at the Transportation Department’s headquarters, three agency officials detailed widespread problems in Fiat Chrysler’s handling of 23 recalls covering more than 11 million vehicles since 2013. The agency said Fiat Chrysler repeatedly violated laws governing auto safety defects and often kept NHTSA “in the dark.” It said those problems hindered NHTSA from properly doing its job and potentially put car owners at risk.

The agency says Fiat Chrysler failed to properly notify car owners and NHTSA of recalls in a timely fashion, and did not ensure there were adequate parts. It said Fiat Chrysler initiated recall fixes that did not work. In one case the automaker suspended a recall campaign and asked dealers to return parts for quality verification without notifying NHTSA. Fiat Chrysler owners have waited 18 months for replacement parts to get some recall repairs completed.

Scott Kunselman, senior vice president of vehicle safety and regulatory affairs at Fiat Chrysler’s U.S. unit, didn’t dispute the allegations during the hearing. He admitted the company has “fallen short” in handling recalls and acknowledged the agency’s “legitimate concerns.” He instead focused on the company’s efforts to reform and improve how it addresses safety issues.

In a brief Detroit News interview after the hearing, he denied the company had intentionally misled the agency. “The plan is to move forward,” he said, noting the company has restructured its safety efforts.

Kunselman acknowledged “some of the things we’ve done were sloppy. We absolutely had no mis-intent.”

Jennifer Timian, head of NHTSA’s Office of Defects Investigation, said at the hearing, “We have serious concerns with Fiat Chrysler notifications to owners and to NHTSA about its recalls. In every one of the 23 recalls, we have identified ways in which Fiat Chrysler failed to do its job.”

She said problems with the information that Fiat Chrysler reports — or in many cases, fails to report — to NHTSA are widespread. It often has missed deadlines to notify owners of recalls by weeks or months.

Fiat Chrysler has “repeatedly failed to provide NHTSA with other critical information about its recalls, including changes to the vehicles impacted by the recalls and its plans for remedying those vehicles,” she said, adding it “impedes our ability to do our job.” She noted the recalls under investigation involve deaths and serious injuries.

NHTSA’s Scott Yon, chief of the vehicle integrity, said other automakers don’t act like Fiat Chrysler.

He said the company takes a long time to produce repair parts, owners have trouble getting repairs and the remedies sometimes don’t work: “Except in extraordinary circumstances, no owner of a car or truck with a safety defect should have to wait for years to get the remedy repair completed.”

Joshua Neff, a senior safety recall analyst, said Fiat Chrysler failed to properly notify owners in seven cases. He said the automaker misled NHTSA about its Takata recalls and “failed to send recall notices to vehicle owners for months.”

“Fiat Chrysler has repeatedly failed to provide correct information to the agency on basic issues,” Neff said. “In my considered judgment, such errors reflect carelessness or lack of attention to detail on the part of Fiat Chrysler’s employees responsible for administering recalls that could also have more more consequential results for vehicle and driver safety.”

The entire auto industry closely watched the hearing as it girded for a new level of scrutiny by federal regulators.

The public forum was the latest sign of NHTSA’s get-tough attitude with automakers. The agency came under criticism from the Transportation Department’s Office of Inspector General in a recent audit for failing to hold automakers accountable and properly investigate safety issues.

The hearing 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 60 deaths because of gas tank fires that have occurred when the Jeeps are hit from behind. In recent months, the agency has questioned a growing number of Fiat Chrysler actions.

Asked if there have been settlement talks between the auto safety agency and Fiat Chrysler, Rosekind said there are ongoing discussions. Fiat Chrysler officials met with NHTSA last month to discuss their efforts to bolster and reform safety.

He said if the agency ordered a buyback program, it would want to ensure that it was set up to work properly.

This was the first NHTSA public hearing since 2012, when the agency 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.