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FCA to pay record R1.1bn for recall lapses

2015-07-27 13:15

HEFTY FINE FOR FCA: Fiat Chrysler Automobiles CEO Sergio Marchionne addresses workers in Detroit, Michigan. FCA will have to pay a record R1.1bn for lapses in recalls of its vehicles. Image: AP / Paul Sancya

MILAN, Italy - Fiat Chrysler Automobiles (FCA) will pay the equivalent of R1.1-billion for lapses in recalls of its vehicles under a deal reached with US regulators, the company said on Monday (July 27).

The Italian-American automaker will pay a R882-million fine to the National Highway Traffic Safety Administration (NHTSA).

It will spend a further R252-million on "consumer outreach activities and incentives to enhance certain recall completion rates" and will be required to pay an additional R189-million if it fails to comply with the terms of the deal, it said in a statement.

UNDER SCRUTINY

Under the deal, an independent auditor will monitor the company's recall process for three years. If the company fails to comply with the terms imposed, the NHTSA can extend the scrutiny by another year.

In a report on Sunday (July 26), the Wall Street Journal quoted sources as saying that under the deal the company will buy back some defective vehicles.

The fine was to punish legal violations in recalls of 11-million vehicles, including older Jeep models with rear gas tanks linked to numerous fatal fires, the Journal said.

The NHTSA had accused the automaker of obstructing the work of regulators, of not alerting car owners to problems in a timely manner, and of carrying out insufficient repairs, the report said.

The auto company on Friday (July 24) announced recalls of 1.4 million vehicles in the United States after hackers demonstrated they could remotely control a Jeep Cherokee  while it was in operation.

The R1.1-billion of penalties imposed on Fiat Chrysler (FCA) are greater than those slapped on General Motors (R441-million) for delayed recalls and on Japan's Honda (R882-million) for hiding safety problems in some of its vehicles.




Read more on:    fiat  |  chrysler  |  usa  |  automotive industry  |  recalls

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