July 27--Federal safety regulators signaled Monday that they are taking a tougher stance on automakers that don't identify and quickly repair defects in their cars.
Their remarks came a day after the National Highway Traffic Safety Administration said Fiat Chrysler Automobiles had admitted violating safety regulations, would pay record fines and agreed to buy back hundreds of thousands of Ram trucks.
"We are sending an unambiguous message to the industry," U.S. Transportation Secretary Anthony Foxx said. "if you skirt the laws or violate the laws we are going to penalize you."
The enforcement action follows a public hearing earlier this month at which NHTSA detailed problems with 23 Fiat Chrysler recalls covering more than 11 million defective vehicles.
The automaker has since admitted to violating federal safety regulations by not executing effective and timely recall remedies, failing in its notification obligation to vehicle owners and dealers and not keeping regulators informed of safety problems.
"We are continuing to be very aggressive in ensuring automakers are following the rules and that vehicles with defects are being fixed," Foxx said.
In a signed consent order disclosed Sunday, Fiat Chrysler agreed to a $105-million civil penalty, the largest imposed by NHTSA. It also agreed to buy back the trucks, which have a suspension problem that can cause them to suddenly veer out of control.
The agency and the automaker described the terms differently. NHTSA said that Fiat Chrysler will have to buy back as many as 500,000 trucks. Company spokesman Eric Mayne said it won't be more than 193,000 because it has repaired the rest. The company said its agreement allows it to repurchase the vehicles, repair them and sell them.
Moreover, owners of 1 million Jeeps that are prone to deadly fires when rear-ended will receive a financial incentive -- a $100 gift card -- to bring their Jeeps in for inspection and repairs. The owners of 1993-98 Jeep Grand Cherokees also will have the choice of trading them in for $1,000 over fair market value.
The company said in a statement that it would "improve our handling of recalls and re-establish the trust our customers place in us. We are intent on rebuilding our relationship with NHTSA and we embrace the role of public safety advocate."
Fiat Chrysler also agreed to hire a NHTSA-approved independent monitor to track, assess and report the company's recall performance for the next three years.
"Fiat Chrysler's pattern of poor performance put millions of its customers, and the driving public, at risk," said NHTSA Administrator Mark Rosekind.
The automaker said part of its agreement with regulators includes research on industry-wide safety objectives, such as identifying the best methods to identify problems, issue recalls and encourage consumers to have their cars repaired.
There are several instances in recent years of unrepaired recalled cars being sold or rented and then causing fatal crashes.
The regulatory action represented renewed vigor on the part of regulators and a wake-up call for the auto industry, analysts and safety advocates said Monday.
NHTSA's move comes after the agency itself has faced fierce criticism on Capitol Hill and by safety groups for allowing automotive safety defects to fester for years before taking action.
"If automakers weren't convinced before, NHTSA made clear with the record $105-million fine and unprecedented vehicle buyback requirement against Fiat Chrysler that it is serious and will be aggressive about going after automakers who don't quickly recall vehicles with defects," said Michelle Krebs, an analyst with the Autotrader car shopping service.
The action could also serve to make car companies even more aggressive about recalls because it might be less expensive to get on top of defects quickly, rather than ignoring them and waiting for the safety regulator to step in with fines and sanctions, analysts said.
NHTSA also has changed its tactics. In previous fines it has allowed companies to pay without always admitting guilt, said Sean Kane, president of the private consulting firm Safety Research Strategies.
"Now you just can't say we disagree with you about the details but will still pay the fine to settle the issue," Kane said. "This is a different type of enforcement. It is a very good sign and a long time coming."
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