Chrysler Recall Review by U.S. Escalates With NHTSA Hearing

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An investigation into how Fiat Chrysler’s U.S. unit has been handling the recall of millions of vehicles intensified Monday as federal officials requested more documents from the automaker and scheduled a rare public hearing.

The U.S. National Highway Traffic Safety Administration is concerned about what it says is the mishandling of 20 separate recalls covering more than 10 million vehicles, including for repairs of fatal flaws linked to air bags and fuel tanks. It was a pattern of potential violations, rather than any specific recall, that brought the unusual agency action, NHTSA Administrator Mark Rosekind told reporters on a conference call.

NHTSA has become more aggressive since it was lambasted by Congress for failing to be more active prior to last year’s revelation that about 2.6 million General Motors Co. cars had a known ignition-switch defect that went unrecalled for years. For Fiat Chrysler, the agency said it has fielded complaints from consumers about the absence of recall notifications, the lack of parts when people schedule repairs and “misinformation from dealers.”

“It is not enough to identify defects,” NHTSA Administrator Mark Rosekind said. “Manufacturers have to fix them.”

June Deadline

Formally known as FCA US, the Auburn Hills, Michigan-based unit of Italy’s Fiat Chrysler Automobiles NV owns the Chrysler and Jeep brands. It was given until June 1 to turn over documents about its recall progress and could face fines of $7,000 per day for failing to cooperate with NHTSA’s special order.

“The average completion rate for FCA US LLC recalls exceeds the industry average and all FCA US campaigns are conducted in consultation with NHTSA,” the company said in an e-mailed statement. “The company will cooperate fully.”

Rosekind declined to give an industry average after the FCA statement. He said earlier he was unhappy with the completion rate of recall repairs for a fuel tank defect on some Jeeps.

A public hearing scheduled for July 2 is a step rarely invoked by NHTSA, which usually negotiates with automakers behind the scenes over the scope of a recall, timing and potential remedies. The last time the agency had a public hearing on a recall was in 2012, for a single fix by a small motorcycle importer called Wildfire Motors.

Fuel Tanks

One of the FCA recalls most at issue involves the repair of 1.56 million Jeep Liberty and Grand Cherokee sport-utility vehicles because of a potential defect related to fuel-tank design that can lead to fires when the vehicles are rear-ended. NHTSA had said that as of September, only 3.9 percent of those vehicles had been repaired.

The agency warned Fiat Chrysler Chief Executive Officer Sergio Marchionne in a November letter that the company needed to accelerate its repairs.

In the latest updates on the Jeep fuel-tank recall filed with NHTSA, 20.6 percent of the affected vehicles were repaired at the end of March. Still, the 133,791 vehicles repaired in the first three months of 2015 was barely more than the 126,075 repaired in the final three months of 2014, Rosekind said.

FCA was little changed in New York trading Monday. The shares have climbed 33 percent this year.

Back, Forth

“The company and NHTSA have been going back and forth on recalls,” said Richard Hilgert, a Morningstar Inc. analyst in Chicago. “It’s just something that’s already built into the equation.”

GM went through its own fight with NHTSA last year, though managed to defy the odds of its recalls. Instead of showroom business tanking -- as Toyota Motor Corp.’s did during its recall crisis about five years ago -- GM gained market share.

“The revelations about GM’s recall fiascos didn’t clobber GM sales, but GM has more models that people want,” said Erik Gordon, a business professor at the University of Michigan in Ann Arbor. “Other than Jeep, Fiat Chrysler models are not strongly preferred by most people, so Chrysler could suffer more for its alleged sins.”

Among the 20 FCA recalls cited Monday, are ones for defective gas tanks, flawed Takata Corp. air bags, unintended ignition switch movement, alternator failure and loss of steering control.

It’s questionable whether Chrysler is meeting its obligations to protect the drivers from safety defects, NHTSA’s Rosekind said. As an example, Rosekind said the agency is continuing to get reports about ceiling fabric fires in the Dodge Durango and Jeep Grand Cherokee, even after they’ve been recalled.

FCA could be fined a maximum of $35 million for failing to cooperate, according to NHTSA’s order.

The agency fined Honda Motor Co. a record $70 million earlier this year for two closely related violations over its handling of Takata air-bag failures. Rosekind declined to comment on whether the agency would treat each of the 20 FCA recalls under review as separate violations.

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