The National Highway Traffic Safety Administration has just imposed its largest civil penalty ever. The National Highway Traffic Safety Administration has slapped Fiat Chrysler with a fine of up to $105 million for allegedly mishandling the recalls of more that 11 million cars that are potentially defective.
The Transportation Secretary is using Fiat Chrysler as an example that they are sending very sharp signals to the industry that they are very serious about not violating laws. They are also enforcing the importance of proper recalls, and that their goal is to ensure the safety of the American public, and to make sure defective vehicles are off of the roads.
COMPANY MAY HAVE TO BUY BACK OVER A HALF MILLION VEHICLES
As a part of the agreement, the company might have to buy back more than half a million vehicles at prices that are significantly higher than the market value. The National Highway Traffic Safety Administration told reporters during a conference call that they are using their authority to get defective vehicles repaired or off of the road.
According to reports from the NHTSA, Chrysler inappropriately made over two dozen recalls including Dodges and Jeeps with electrical problems, defective switches, and faulty axles. Some car owners were not properly notified of their cars’ defects and the options for repairing them were not always timely or effective.
NHTSA SAYS CHRYSLER PROVIDED FAULTY INFORMATION
The NHTSA says that the company also provided the agency with incorrect and incomplete information which is potentially a violation of the Motor Vehicle Safety Act. According to NHTSA officials, this is a very good example of how to not properly issue a recall.
In addition to the $70 million cash penalty, the NHTSA is also fining Chrysler Group LLC $20 million to address the recall issues and if the company doesn’t perform properly, it could lead to another $15 million fine which brings potential damages to $105 million.
THEY WILL HAVE TO OFFER INCENTIVES TO JEEP OWNERS
Chrysler will be required to offer certain Jeep owners cash incentives to get their vehicles fixed. Also, if the owner opts out of the repairs they may trade in the trucks, which are prone to fires after rear-impact crashes, at rates a lot higher than the market value.
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