(MENAFN- Gulf Times) Fiat Chrysler Automobiles will agree to pay the US Department of Transportation a record $105mn following an investigation into whether the company delayed acting on safety defects, according to a person familiar with the matter.
Fiat Chrysler will also agree to have an independent monitor evaluate how the Auburn Hills, Michigan-based automaker handles recalls, the person said. The announcement could come as soon as today.
The agreement would represent the largest penalty ever imposed by the National Highway Traffic Safety Administration, the agency that regulates the auto industry and investigates safety defects. It would be the latest in a series of record-breaking fines, superseding a $70mn penalty Honda Motor Co paid last year.
NHTSA has been stepping up its enforcement efforts following criticism that it acted too slowly on reports about failed General Motors Co ignition switches that caused air-bags to lose power. The agency faced similar complaints over its response to reports that air-bags made by could explode, sending shrapnel toward front-seat occupants.
The carmaker's agreement would follow the recall announced Saturday of 1.7mn of its late model Ram trucks to replace air-bags that may deploy inadvertently due to two different faults.
On July 2, NHTSA held a rare public hearing to go over evidence that Fiat Chrysler had taken too long to initiate safety recalls, delayed producing parts needed to fix defects, and didn't do enough to ensure that consumers complied. NHTSA officials scrutinised a set of 23 recalls by the company covering more than 10mn vehicles to fix various flaws. Mark Rosekind, the agency's head, said at the time that Fiat Chrysler exhibited a pattern of not meeting its legal obligations.
Fiat Chrysler and NHTSA officials declined to comment. The fine was reported on Saturday by the Wall Street Journal. Specific examples NHTSA investigators cited at the hearing included defective pinion nuts in Ram pickup trucks that could cause the wheels to lock and drivers to lose control. Fiat Chrysler identified the defect in early 2013 but took more than two years to come up with replacement parts.
Other Ram truck owners waited more than 15 months for repairs for a faulty tie rod.
One of the recalls most at issue involves the repair of 1.56mn Jeep Liberty and Grand Cherokee sport-utility vehicles because of a potential defect related to fuel-tank design that can lead to fires when vehicles are rear-ended.
Safety advocates have criticised Fiat Chrysler for years of delay in acknowledging the danger of the design, despite reports of fatalities. They've dismissed a trailer hitch assembly being installed to reduce the danger of fuel-tank leaks as inadequate.
Fiat Chrysler has only repaired 6% of Jeep Grand Cherokees with exposed gas tanks that can catch on fire, the agency said at the hearing.
Fiat Chrysler has already promised to retrain its dealers and create a smartphone alert to improve responses to recalls. It has also hired more agents dedicated to answering consumer phone calls, and begun extensive training at the company's dealerships.
While the Fiat Chrysler agreement would be a record for NHTSA, it's still well below the $1.2bn Toyota Motor Corp paid in March 2014 to settle a US Justice Department criminal investigation into whether the Japanese automaker covered up information on sudden, unintended acceleration in its vehicles.
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