Fiat Chrysler is set to pay a record $105m fine as a penalty for violating federal safety laws after mishandling a series of vehicle safety recalls.
The expected fine is in response to Fiat Chrysler’s handling of 23 recalls involving 11 million vehicles, and is set to be imposed by the National Highway Traffic Safety Administration (NHTSA) after a probe into the car manufacturer’s safety and recall practices. Chrysler agreed to pay a $70m cash fine as part of the settlement, and will also pay an additional $20m to meet performance requirements in regards to fixing drivers vehicles by offering cash incentives to owners.
Owners of Jeep Grand Cherokee models from 1993-1998 which were prone to deadly fires due to leaky gas tanks and have yet to be repaired will be able to trade in their SUV for $1000 above market value or receive a $100 gift card to get it fixed.
As well, owners of Jeep Liberty models from 2002-2007 or a Grand Cherokee model from the years 1999 -2004 can also receive the gift card to have their SUV’s fixed.
Owners of several models of Dodge and Ram trucks will also have the option to sell their vehicle back to Fiat Chrysler if their vehicles were recalled for defective suspension parts and have not yet been repaired.
In addition to the cash fine and owner incentives, the company could also face another $15m in penalties if an independent monitor finds additional violations of US auto safety laws, or it decides that Chrysler has violated the terms of its agreement.
The $105m civil penalty is the largest ever imposed by the NHTSA, beating the previous record of $70m imposed against Honda earlier this year for lapses in recalls of air bags made by Takata Corp.
US Transportation Secretary, Anthony Foxx, said the penalties imposed on Fiat Chrysler were a warning to all other car manufacturers that action will be taken if safety obligations are compromised.
“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, “ he said.
“This civil penalty puts manufacturers on notice that the Department will act when they do not take their obligations to repair safety defects seriously.”
The $105m fine imposed on Fiat Chrysler stems from a NHTSA hearing on July 2, in which the agency detailed a number of the automaker’s shocking safety oversights.
These included a failure to notify customers of recalls, the long time taken to launch the actual recalls, delays in producing and distributing parts needed to repair defects, and a failure to come up with repairs that fix the safety defects.
While Chrysler’s record fine is undoubtedly a setback for the automaker, it comes on the back of its best U.S sales for the month of July in ten years.
The company announced a 6% increase compared with sales in July 2014 – the group’s best July sales since 2005.
Eight of Fiat Chrysler US vehicles set sales records for the month of July, including the Chrysler 200 which posted an 85% increase on its sales from July 2014.
Fiat Chrysler Mexico also had a fantastic month with a sales increase of 24% on July 2014, and its best July since 2009.
In maintaining the momentum of a fantastic month of sales, Fiat Chrysler US announced this week that it has invested $2.5m to upgrade the existing climatic test cell at its Chrysler Technology Center.
The upgrade consists of a new front dyno that can handle loads of up to 350 horsepower combined with a rear dyno operating up to 650 horsepower, with Chrysler using its all-new 4×4 dynamometer to test the 4×4 capabilities at 40 degrees below zero and in wind speeds of 100mph.