U.S. regulators turn up heat on Fiat Chrysler recalls

[May 19, 2015]  By David Morgan and Paul Lienert
 
 (Reuters) - The Obama administration on Monday escalated a running regulatory battle with Fiat Chrysler Automobiles NV, saying it could impose "multiple penalties" on the automaker and order a public hearing to examine FCA's handling of 20 recalls affecting more than 10 million vehicles.

The National Highway Traffic Safety Administration said Fiat Chrysler could face up to $700 million in fines and be required to buy back or replace vehicles if regulators find evidence that it failed in its legal recall obligations.

A public hearing would be the broadest the agency has held to date and follows what NHTSA Administrator Mark Rosekind described as frustrated attempts by the agency to get Fiat Chrysler's U.S. unit, FCA US LLC, to move more aggressively to correct defects linked to fires, loss of control, unintended air bag deployments and fuel leaks.

"We need to determine if there's a pattern here that presents a significant safety hazard," he said.

FCA's U.S. arm said in a statement that it would cooperate fully with NHTSA. But the automaker said its average recall completion rate exceeds the industry average and that all recall campaigns are conducted in consultation with NHTSA.

The FCA recalls earmarked for scrutiny involve a range of Chrysler models that date back to 1993, including Jeep Grand Cherokee sport utility vehicles, Dodge Ram pickups, and Chrysler Town and Country minivans. Various versions of the Grand Cherokee, one of Fiat Chrysler's most popular and profitable models, are included in eight of the 20 recalls.

One of the campaigns cited by NHTSA was the 2013 recall of nearly 1.6 million Jeep vehicles equipped with fuel tanks that could rupture and cause a fire. Chrysler last month told the agency that it had repaired about 21 percent of those vehicles.

In comparison, General Motors Co reported a completion rate of about 11 percent on more than 5 million cars recalled last year for faulty ignition switches, while Honda Motor Co had a completion rate of about 15 percent on more than 5 million cars recalled last year because air bag inflators could rupture, according to documents filed with NHTSA.

Rosekind on Monday declined to say whether NHTSA would reopen an investigation into the fuel tanks of 1999 to 2004 Jeep Grand Cherokees. A 1999 model was cited in a $150 million court verdict against the automaker in the death of a four-year-old boy in a fiery crash. Fiat Chrysler has asked for a new trial.

Those vehicles were part of an earlier NHTSA investigation of more than 5 million Jeeps that resulted in a narrower 2013 recall.

Rosekind said NHTSA asked Fiat Chrysler last November to move more aggressively to install more trailer hitches on the recalled Jeeps but expressed disappointment at the automaker's repair rates.

FCA said it fixed 133,791 of those Jeeps in the first quarter and 126,075 in the previous quarter, bringing the completion rate to 21 percent, or 320,665 vehicles.

FCA told the NHTSA last month that another 536,951 Jeeps in that recall could not be repaired because they were no longer registered or their owners could not be reached.

(Reporting by David Morgan in Washington and Paul Lienert in Detroit; Editing by Andrew Hay and Steve Orlofsky)

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