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Chrysler to pay $105 million for mishandling recalls

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#1 · (Edited by Moderator)
Fiat Chrysler to buy back 500,000 pickups in recall deal

Fiat Chrysler to buy back 500,000 pickups in recall deal
AP
By: Tom Krisher & Jonathan Fahey
July 26, 2015



DETROIT (AP) — Fiat Chrysler must offer to buy back from customers more than 500,000 Ram pickup trucks in the biggest such action in U.S. history as part of a costly deal with safety regulators to settle legal problems in about two-dozen recalls.

The trucks, which are the company's top-selling vehicle, have defective steering parts that can cause drivers to lose control, and some previous repairs have been unsuccessful. So to get them off the roads, Fiat Chrysler agreed to the buyback, according to the National Highway Traffic Safety Administration. Owners also have the option of getting them repaired, the agency said in documents released Sunday.

Also, owners of more than a million older Jeeps with vulnerable rear-mounted gas tanks will be able to trade in their vehicles for more than market value or be paid to get them repaired, the agency said in a statement. The Jeeps' fuel tanks are behind the rear axle and have little to shield them in a rear crash. They can rupture and spill gasoline, setting the vehicles on fire. At least 75 people have died in crash-related fires, although Fiat Chrysler maintains they are as safe as comparable vehicles from the same era.

Full story available at the link above.
 
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#15 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Ouch, that is gonna leave a mark.............

Anybody know what year range these buy-backs are?

500K x 10K (per truck) is $5,000,000,000
Yeah, but every truck they buy back will leave somebody with no truck. Salesman: "We've got a whole line of new Dodge trucks we could put you in."

Plus, every truck they buy back, they are allowed to repair and resell.

Still a hit to their bottom line, but not quite THAT bad.
 
#3 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

In addition to the penalties, the order requires FCA to:

■ Offer to buy back more than half a million vehicles with defective suspension parts that could cause the vehicle to lose control. The vehicles, mainly Dodge SUV and Ram pickup trucks, were built between 2008 and 2012. The consent order does allow Fiat Chrsyler to repair and then resell the vehicles it buys back from the current owners. The automaker declined to provide an estimate on Sunday of the potential cost of its obligations beyond the civil penalties.

■ Offer owners of more than a million Jeeps Cherokee that are prone to deadly fires to trade their vehicle in for above its market value, or receive a financial incentive to get a trailer hitch installed for additional protection.

■ Agree to work with an independent monitor approved by NHTSA for the next three years. The monitor’s job will be to assess, track and report the company’s recall performance.

http://www.freep.com/story/money/2015/07/26/fiat-chrysler-nhtsa-fine-recalls/30693265/
 
#35 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Good god. Buy back? They have to be worth 15-20k a truck on average.
With that said, many will ignore the offer, while others will end up in a new truck, so it's a win-win for Fiat! These types of recalls go in the favor of the auto company.
 
#7 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Holy ****, Batman. Maybe Sergio should look to link up with a big, big bank.
 
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#9 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

When it's your best selling product you need to focus on retaining the customer - not the sale profit. It cost far more to buy a new customer than retain an existing one.

I would be offering two buy back prices, for example give the real market value offer - don't haggle or skimp perahaps even employing an outside assessor like Blue Book - I think you have in the US. And say this is your walk away offer.

But then add $5K to that amount and say this is your step into a new Ram offer.... all other incentives currently on offer to apply on top of that.

That would be $2.5 billion well spent. Fortunately FCA is flushed with more cash than even GM at the moment.

You of course still have to repair and sell the 500,000 trade-in vehicles, but I would remanufacture the best of them and ship them off to BRICK countries as manufacturer guaranteed pre-owned vehicles to get some poorer customers there into your later model vehicles. That way they don't steal sales from your new line in the US where you make your best profits.


;)
 
#17 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

When it's your best selling product you need to focus on retaining the customer - not the sale profit. It cost far more to buy a new customer than retain an existing one.

I would be offering two buy back prices, for example give the real market value offer - don't haggle or skimp perahaps even employing an outside assessor like Blue Book - I think you have in the US. And say this is your walk away offer.

But then add $5K to that amount and say this is your step into a new Ram offer.... all other incentives currently on offer to apply on top of that.

That would be $2.5 billion well spent. Fortunately FCA is flushed with more cash than even GM at the moment.

You of course still have to repair and sell the 500,000 trade-in vehicles, but I would remanufacture the best of them and ship them off to BRICK countries as manufacturer guaranteed pre-owned vehicles to get some poorer customers there into your later model vehicles. That way they don't steal sales from your new line in the US where you make your best profits.


;)
Yes to all that. This could be a huge sales boon :drive: if el Sergio is smart enough to play it right.

Yeah, but every truck they buy back will leave somebody with no truck. Salesman: "We've got a whole line of new Dodge trucks we could put you in."

Plus, every truck they buy back, they are allowed to repair and resell.

Still a hit to their bottom line, but not quite THAT bad.
 
#11 · (Edited)
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Just glad GM never got into merger talks with FCA, 1.5 million buy back that gonna cost FCA a lot of money.

In this day and age decades after the Pinto design disaster, how can a Jeep designer still locate make a basic simple design mistake like locate a fuel tank of highly volatile gasoline in a high sitting vehicle on the aft wrong side of the rear diff, l just find this just totally shocking and totally unacceptable that Jeep can't get design basics right and are getting fined so heavily in 2015 in this day and age.

Jeep fuel tank design also met passed Federal regulation safety standards at conception when it was first launched into the market. so who is the authority that is also supposed to be monitoring approving Jeeps fuel tank design? Should others also be held accountable?

This could end up bankrupting FCA, just how much will 1.5 million Jeep & Rams cost FCA to buy back?
 
#13 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Just glad GM never got into merger talks with FCA, 1.5 million buy back that gonna cost FCA a lot of money.

In this day and age decades after the Pinto design disaster, how can a Jeep designer still locate make a basic simple design mistake like locate a fuel tank of highly volatile gasoline in a high sitting vehicle on the aft wrong side of the rear diff, l just find this just totally shocking and totally unacceptable that Jeep can't get design basics right and are getting fined so heavily in 2015 in this day and age.

Jeep fuel tank design also met passed Federal regulation safety standards at conception when it was first launched into the market. so who is the authority that is also supposed to be monitoring approving Jeeps fuel tank design? Should others also be held accountable?

This could end up bankrupting FCA, just how much will 1.5 million Jeep & Rams cost FCA to buy back?
FCA is not required to buy back the Jeeps. They have to give an incentive, however, for those who want to move into a new Jeep. I also seriously doubt that FCA would agree to something that would bankrupt them.
 
#12 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Remember the key word is offer to buy back the trucks. I would guess the owners opting to sell their trucks back to FCA would be relatively small even with the extra 10 percent differential. One is not likely to sell what they have when there is the cost of getting into a new or similar truck. After all, we know dealers low-ball offers. Besides, FCA can repair and resell the trucks to recoup their losses.
 
#16 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

As noted above, I wonder what Uncle Sam has in store for GM, I think it will be painful. Fortunately for GM, they have activist investors looking out for GM and ensuring they have less cash on hand to cover any huge fines.
 
#30 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

As noted above, I wonder what Uncle Sam has in store for GM, I think it will be painful. Fortunately for GM, they have activist investors looking out for GM and ensuring they have less cash on hand to cover any huge fines.
GM has already booked that expense. I do not think the US government will fine GM so hard as to Harm them.
 
#22 ·
The National Highway Traffic Safety Administration said Chrysler admitted to violating federal safety law. The agency has been pressing the automaker over its handling of recalls for several years.

NHTSA also announced that Chrysler (FCAU) has agreed to "submit to rigorous federal oversight" for three years and to hire an independent monitor.

The expected fine stems from Chrysler's handling of 23 recalls involving 11 million vehicles.

Of the $105 million Chrysler agreed to pay, $70 million is a cash penalty. The company will also pay another $20 million to ensure that drivers' vehicles are fixed by, among other things, offering cash incentives to owners.

Finally, Chrysler could face another $15 million in penalties if the independent monitor decides in the future it hasn't met certain terms under the settlement.

One of the most high profile of the recalls involved in Sunday's settlement involved Jeep Grand Cherokees from model years 1993-2007. At issue were gas tanks that can leak after a severe rear impact. NHTSA said in 2013 that more than 50 deaths had been linked to the problem.

Now, owners of more than 1 million Jeeps "prone to deadly fires" will be able to trade in their SUV for a price above market value or get a "financial incentive" to have it fixed.

In addition, owners of more than 500,000 vehicles with defective suspension parts can sell their vehicle back to Fiat Chrysler.

Chrysler said in a statement that it accepts the "consequences with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us."

The federal auto safety regulator, under fire on Capitol Hill for not being tough enough on recalls, has recently come down hard in a number of cases.

The agency fined Honda (HMC) $70 million earlier this year for failing to report accidents and safety issues.

Continued:
http://money.cnn.com/2015/07/26/new...sr=fbmoney07262015chryslerfineupdate430pstory
 
#41 · (Edited)
1,000,000 "prone to fire" Jeeps over 14 model years x billions of miles driven x 50 deaths hardly supports the claim the vehicle is "prone to fire". Just putting it into perspective.

Better minds at math can extrapolate the risk and compare to all vehicles of the same type. It's what actuaries do with insurance rates, not a swipe at those who died in accidents.

At least they put the phrase in quotes.

Just like my chance of accident with the ignition switch in my 05 ION pre-recall was minute. All I wanted was to be able to get the key out when I shut it off. The rest of story arc was hair on fire reporting to give a story "legs".

There's always a feeding frenzy when GM and Chrysler are involved.

And I still can't get the key out without diddling the button under the wheel post recall. Bought 1-13-2005. First problem with it 5-4-2005. And the beat goes on.
 
#26 ·
Re: Fiat Chrysler to buy back 500,000 pickups in recall deal

Not nearly as sweet of a deal as Toyota's 150% of Kelly Blue Book's recommended [excellent condition] Private Party value buyback of their 1995-2000 Tacoma. My father owns a 2014 RAM 1500 4x4. Lucky for him!
 
#27 · (Edited)
Beyond this, I see Toyota provided (free of charge) a rental vehicle for the 3-4 weeks it took for processing. If a frame failed inspection, the truck could not leave the dealership. Toyota also gave special "loyalty" pricing on a new vehicle sold to an owner who lost their truck to the buyback. This was all done proactively, without NHTSA's forced hand.

FCA needs to step it up!
 
#33 ·
Ughh, im not feeling good about this. Hopefully FCA see opportunity with this situation.
 
#36 · (Edited)
Wow...This a GM-sized dumpster fire for FCA.

It probably won't hurt sales at all, as we learned from Ignitiongate, but the shear numbers being talked about here are astounding.

Stock up on popcorn, folks. This one's going to be fun!
 
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#37 · (Edited)
There is a substantial number of vehicles under the three relevant recalls ..... with the now added repurchase provision that have had a satisfactory remedy applied and therefore are not required to have a repurchase option made available.

So that whittles it down considerably ( -60 % ) to approximately 40 % / 200k as of this post.

Specific details are as follows -

From:


FCA NHTSA Consent Order

Ratings: (0)|Views: 55,823|Likes: 0

Published by Detroit Free Press

The order requires Fiat Chrysler to pay a $70 million cash penalty and spend at least $20 million on meeting performance requirements.

More info: Published by: Detroit Free Press on Jul 27, 2015

Copyright:Traditional Copyright: All rights reserved

Availability: Read on Scribd mobile: iPhone, iPad and Android.

download as PDF or read online from Scribd

http://www.scribd.com/doc/272686180/FCA-NHTSA-Consent-Order


http://www.freep.com/story/money/2015/07/26/fiat-chrysler-nhtsa-fine-recalls/30693265/


All from post #3 via baloo http://www.gminsidenews.com/forums/...llion-mishandling-recalls-217105/#post5299425







 
#38 ·
FCA’s buyback list

NHTSA’s consent agreement with Fiat Chrysler requires the automaker to offer to buy back the following models that are under recall:


278,229 vehicles recalled on February 6, 2013 because of a defect that may cause the axle to lock:

■ 2009 model year Chrysler Aspen

■ 2009 model year Dodge Durango

■ 2009-2012 model years Dodge Ram 1500

■ 2009-2011 model years Dodge Dakota


36,710 vehicles recalled on November 6, 2013 because of a defect that may cause the driver to lose steering power and crash:

■ 2008-2012 model years Dodge Ram 4500

■ 2008-2012 model years Dodge Ram 5500


265,057 vehicles recalled on November 6, 2013, to repair and replace steering linkages that may cause the driver to lose steering power and crash:

■ 2008 model year Dodge Ram 1500

■ 2008-2012 model years Dodge Ram 2500

■ 2008-2012 model years Dodge Ram 3500
 
#48 ·
Let me get this straight, FCA is going to have 500,000 buyers in their showrooms over the next few years that are going to be given top dollar for what they are driving!

Bet there are a lot of RAM and Jeep owners itching to upgrade their current ride or at least get one that is alot newer.

Hope every dealer is going to order every vehicle they can get their hands on.

Better yet they can repair the 500,000 vehicles and resell them.

Not a bad deal and free advertising to go with it.
 
#49 ·
You'd think the fines would go back to the US Treasury. If the NHTSA is anything like the DOJ they use them as a slush fund to do with what they want. The DOJ is constantly doing this suing the banks for billions, then giving out grants to political action groups who support certain agendas.

http://www.judicialwatch.org/blog/2014/08/doj-give-leftist-groups-cut-b-settlement/

Judicial Watch first reported the scheme two years ago when Countrywide Financial Corporation doled out $335 million to settle its discrimination lawsuit with the feds. The money was supposed to be distributed to more than 200,000 minority victims who supposedly were charged higher interest rates and fees than white borrowers based on their race not their credit. Instead, a chunk of the money went to Democrat-tied groups not connected to the lawsuit, including the scandal-plagued Association of Community Organizations for Reform Now (ACORN) and the open-borders National Council of La Raza (NCLR).

Now many of the same groups will get more money from a record $16.65 billion settlement with Bank of America. It’s a “historic resolution,” according to Attorney General Eric Holder, and the money will help make amends to borrowers and communities that were negatively affected by the bank’s conduct. Besides settling civil penalties at the state and federal level, the billions will bring relief to struggling homeowners and communities by, among other things, offering new loans and providing financing for affordable rental housing. Delinquent borrowers in Democrat strongholds like Chicago, Oakland and Detroit will also benefit from debt forgiveness.

Leftover funds will go to politically-connected community groups—like the NCLR, Operation Hope and National Community Reinvestment Coalition—that intimidate banks into qualifying more minorities for home loans, even if they really can’t afford it. This part of the deal is conveniently buried in an annex to the 37-page DOJ agreement, but a publication dedicated to covering business, finance and economics draws attention to it in a scathing editorial that refers to the arrangement as extortion.

“In effect, the government has ordered the nation’s largest bank to create a massive slush fund for Democrat special interests,” states the editorial which reveals that radical Democrat activist groups stand to collect millions from Holder’s record deal with Bank of America. “The recession has dried up funding for such groups. But Holder’s massive bank shakedown could rebuild their war chests in a hurry.” The piece also points out that Holder has brokered other similar deals that will provide more back-door funding for the Democrat groups. They include a $13 billion agreement with JPMorgan Chase and a $7 billion deal with Citibank.
Seems the DOJ keeps these actions ongoing seems four or five times a year there's an announcement like such against the financial sector. Hard to imaging NHTSA being any different. If it is indeed the agency of record for the fine.

In government it's a big shell game to cover the tracks of everything they do.
 
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