Chrysler to pay $70 million fine: sources

By David Shepardson
Reuters

WASHINGTON – Fiat Chrysler Automobiles NV has agreed to pay $70 million in fines to resolve a U.S. investigation that it failed to disclose vehicle crash death and injury reports, people familiar with the matter told Reuters on Wednesday.

The settlement is expected to be announced by the National Highway Traffic Safety Administration as early as Thursday. Fiat Chrysler in September acknowledged it had failed to disclose an unspecified number of reports that are required to be submitted to regulators under a 2000 law. NHTSA in September called Fiat Chrysler’s reporting omissions a “significant failure.”

In July, the automaker reached a separate $105 million settlement with NHTSA over its handling of nearly two dozen recalls covering 11 million vehicles.

Major auto companies are required to electronically submit massive amounts of data involving vehicle crashes, deaths, lawsuits, warranty claims and other information.

This is the latest fine imposed by the U.S. auto safety agency after it came under harsh criticism from Congress and in a government audit for not being more aggressive in enforcing safety laws.

In a new highway funding law, Congress agreed to give NHTSA more funding if it implements more reforms outlined by the Transportation Department inspector general.

NHTSA fined Japanese manufacturer Takata Corp. $70 million last month for failing to promptly disclose defects in millions of airbags.

Fiat Chrysler told NHTSA earlier this year it had problems with its software for extracting information from a company database to submit to NHTSA, and as a result significantly under-reported death and injury claims. There is no indication that Fiat Chrysler intentionally hid the reports and no suggestion that NHTSA failed to discover safety defects because of the missing reports.

Fiat Chrysler said in September “it takes this issue extremely seriously, and will continue to cooperate with NHTSA to resolve this matter and ensure these issues do not re-occur.”

NHTSA and Fiat Chrysler declined to comment on Wednesday. The sources asked not to be identified because the settlement had yet to be made public.

The early warning reports are required under the 2000 law passed by Congress after more than 270 people were killed in rollover crashes in Ford Explorers with faulty tires. The law is aimed at helping regulators spot safety defect trends earlier.

In July, Fiat Chrysler agreed to a three-year consent decree it signed as part of the $105 million settlement into its prior recalls. In October, NHTSA named former Transportation Secretary Rodney Slater to monitor Fiat Chrysler’s compliance.

Fiat Chrysler has recalled about 11 million vehicles this year in the United States in 38 campaigns — the most of any automaker — an all-time record.

It has faced scrutiny on a number of auto safety issues, including its recall of 1.4 million vehicles for hacking concerns after two cyber-security researchers used the Internet to remotely turn off a Jeep’s engine as it drove. The automaker also faced scrutiny over fire risks in older Jeep SUVs.

Slater is likely to review the company’s early warning reporting as part of his oversight. Fiat Chrysler is required to conduct sweeping training and safety reforms and must hold regular meetings with NHTSA.

In January, Honda Motor Co agreed to pay a $70 million fine for failing to disclose more than 1,700 reports of deaths, injuries and other information to NHTSA over 11 years. It was the largest auto safety fine in U.S. history at the time.

NHTSA also has fined a number of other smaller companies for failing to comply, including Ferrari NV and Triumph Motorcycles Ltd. for not disclosing early warning reports.

The reporting system has had other problems.

Automakers have 24 broad reporting codes for early warning data but a government audit this year noted “an average vehicle may have over 15,000 components.”

“Without detailed guidance, decisions regarding key aspects of early warning reporting data are left to the manufacturers’ discretion, resulting in inconsistent reporting and data that (NHTSA) and vehicle safety advocates consider to be of little use,” it said.

NHTSA said it plans to toughen early warning reporting rules by June.

Two members of Congress have urged NHTSA to make it easier to make early warning reports available to the public — and want the agency to boost reporting requirements.

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