NHTSA hands down it’s largest fine ever for auto safety violations

The National Highway Traffic Safety Administration is tasked with ensuring that auto manufacturers comply with safety standards to ensure that all vehicles made and sold in the United States meet minimum requirements to protect drivers and passengers. Recently, the organization announced that it will fine Fiat Chrysler Automobiles NV $105 million for lapses in safety recalls that involve over one million vehicles.

Fiat Chrysler is a corporation involving both Italian and American interests. The company manufactures a number of top-selling automobiles in the country, including Jeep sport utility vehicles. According to its consent agreement with the NHTSA, the company will offer a buyback option that covers hundreds of thousands of vehicles and offer owners trade-in incentives or financial help in getting their vehicles repaired. The company has also agreed to submit to an independently conducted audit of its handling of recalls over the past three years.

A New Standard

The $105 million in fines is unprecedented for the NHTSA and represents what some are calling a “new standard” in how the agency will deal with auto manufacturers in the future. To this point, the record fine was $70 million and was imposed against Honda Motor Co for failure to report death and injury due to defects in its vehicles. In most cases, high fines are associated with clear violations of safety that lead to death of a number of victims, such as the $35 million fine imposed against General Motors Co for delaying the report of faulty ignition switches that led to more than 120 fatalities.

However, NHTSA has been gearing up for some time to take a more aggressive stance since the appointment of its new administrator, Mark Rosekind. The agency came under intense scrutiny last year from members of Congress on both sides of the aisle for the perception that it failed to adequately investigate and handle reports of deadly defects such as Takata Corp airbags and GM ignition switches.

A New Kind Of Recall

The agreement with Fiat Chrysler will force the company to cover trade-in or other financial incentives on Dodge Rams, Dakotas and Chrysler Aspens from as long ago as 2008. At least half a million of these vehicles have faulty suspensions that could lead to a loss of control.

In an almost unprecedented move, the United States unit of Fiat Chrysler issued a statement that the company accepted responsibility and offered a “renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us.”
The fines will include a $70 million payment to the NHTSA, $20 million for improving the recall process and $15 million to be placed in trust for possible discovery of further violations.