Fiat Chrysler To Face $105M Penalty

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Fiat Chrysler Automobiles NV will face at least three years of oversight by an independent monitor into its auto safety efforts as part of a sweeping, record-setting $105 million settlement in the government’s investigation of nearly two dozen recalls covering 11 million vehicles.

The Italian-American automaker admitted it broke the law in failing to quickly repair vehicles in three separate recall campaigns and agreed to buy back as many as 578,000 older Ram pickups for steering issues after some owners said they have waited 18 months or longer for repairs because of parts shortages.

The penalty includes a $70 million payment by Fiat Chrysler, plus $20 million that the automaker will spend on safety efforts and $15 million in additional penalties if the automaker fails to perform properly. The automaker can include rebates and recall incentives as part of the $20 million it must spend on safety over three years.

Vehicles in the buyback program include 265,000 2008-12 Ram trucks for a tie-rod assembly steering problem; 35,942 2008-12 Ram 4500 and 5,500 trucks recalled for similar steering problems; and 278,000 2009-12 Ram pickups, 2009-11 Dodge Dakotas, 2009 Dodge Durangos and Chrysler Aspens for a rear axle pinion nut problem that can cause the axle to lock up.

FCA must pay the purchase price minus "a reasonable allowance for depreciation," and will give a 10 percent bonus to owners who haven’t gotten the recalls completed. The automaker intends to repair some of those vehicles and then resell them to the public. That could affect as many as 193,000 pickup trucks and SUVs, according to documents FCA has filed with NHTSA.

In addition, Fiat Chrysler will give owners $100 gift cards for getting recalls completed on more than 1 million Jeeps recalled for gas tank fire risks when hit from behind. It will offer a $1,000 bonuses on trade-ins for new vehicles for owners of 1993-98 Jeep Grand Cherokees. They also can use the $1,000 toward service on another Fiat Chrysler vehicle.

The settlement is significant for Fiat Chrysler. It is equal to about as much as the company’s reported net income of $101 million in the first three months of the year.

But it is a fraction of the $700 million or more in fines Fiat Chrysler could have faced. The National Highway Traffic Administration could have fined Fiat Chrysler $35 million in each of 23 recalls under investigation if the agency had determined it failed to meet legal requirements in each of the campaigns.

NHTSA said in the 23 recall campaigns Fiat Chrysler failed in a timely fashion to fix vehicles, notify owners of defects or notify NHTSA of recalls or safety related communications in a timely fashion. The agency earlier this year accused the automaker of misleading it.

NHTSA has a report of one death and 32 reported crashes related to the steering defects since the recalls were announced. 

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