FCA reduces number of vehicles for buyback
Washington — Fiat Chrysler Automobiles NV said Thursday it was reducing its estimate of the number of vehicles eligible for a buyback under a government settlement by about 10 percent to 175,000 — and was taking an initial charge of $88.3 million to account for the settlement.
The Italian American automaker had said earlier this week that it had repaired 67 percent of about 578,000 eligible mostly trucks for a buyback in three recall campaigns — meaning about 193,000 could be bought back. The automaker said in its quarterly filing that it had repaired about 70 percent, leaving 175,000 that could be bought back.
Only vehicles that haven't had repairs are subject to the buyback offer. They will get fair market value — plus a 10 percent premium under the settlement. Owners will get buyback offers within 60 days and an independent monitor will ensure that owners get fair offers.
As part of the $105 million settlement covering 11 million vehicles in 23 recalls that will last at least three years, Fiat Chrysler can use $20 million toward the costs of buying back vehicles and offering incentives to some Jeep owners to get repairs or trade in their SUVs. The automaker reiterated that it does not think the buyback will be a material cost beyond that — and noted that it can resell any vehicles it buys back.
Fiat Chrysler says 57,000 2009-2011 Ram 1500 and Dakota pickups and 2009 Aspen and Durango SUVs are eligible, as are 94,000 2008-2012 heavy duty Ram pickups and 24,000 2008-2012 Ram Chassis Cab trucks. The National Highway Traffic Safety Administration said the buybacks were needed because of a lack of replacement parts — and owners complaining that they couldn’t get repairs for 15 months or more.
In a Detroit News interview Wednesday, NHTSA Administrator Mark Rosekind declined to say what the “line” is for showing substantial compliance with a recall. The agency said other similar tie rod steering recalls to the three subject to the buyback offer weren’t included because of higher recall completion rates. “All of that is to be determined,” Rosekind said.
He emphasized that NHTSA isn’t ending its scrutiny of Fiat Chrysler — and has a number of open investigations into Fiat Chrysler vehicles. “This doesn’t mean we are done,” Rosekind said, noting that Fiat Chrysler will have an independent monitor and an independent consultant to reform its safety practices. “We’re not done. They have the first step to try and make it better — if it’s not done better, then guess what? — we have the option to do anything else.”
Fiat Chrysler CEO Sergio Marchionne opened an earnings call Thursday “to set the record straight on a few issues that have now surfaced in terms of our understanding, or settlement, with NHTSA.”
Those issues included the financial breakdown of the up to $105 million consent agreement and the number of vehicles eligible for a buyback under the government settlement.
Some media outlets originally reported that the buyback included about 578,000 trucks — based on incorrect information in a government press release. However only vehicles that haven't had repairs are eligible for the offer.
“Hopefully with these comments we would have clarified matters related to the financial implications of the NHTSA settlement that was announced last Monday,” Marchionne said.
He reiterated the company does not expect the buyback to top $20 million.
Rosekind and Transportation Secretary Anthony Foxx both said they didn’t talk to Marchionne during the settlement talks in recent weeks.