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Fiat Chrysler Hit With Record $105 Million Fine Over Botched Recalls
An anonymous reader writes: The U.S. National Highway Traffic Safety Administration has levied a record fine against Fiat Chrysler Automobiles to punish them for failing to adequately recall and fix defective cars. (If Fiat sounds familiar, it's the same company that issued a 1.4 million-vehicle recall on Friday over a remote hack.) The NHTSA's $105 million fine is half-again as much as the next biggest fine (given to Honda last year over faulty airbags). Fiat Chrysler "admitted to violating federal rules requiring timely recalls and notifications to vehicle owners, dealers and regulators." The company will be forced to buy back hundreds of thousands of vehicles (at the owners' discretion, of course) that have problems with the suspension that could lead to a loss of control. A million more Jeep owners will be given a chance to trade in their vehicle at a higher rate than market value because of rear-mounted gas tanks that are prone to catching fire.
... Wrong product, buy wine!
Ok, so $105 Million sounds like a lot... and of course it isn't chump change...
But they just issued a recall of 1.4 million vehicles. So $105 Million works out to $75 per vehicle.
I suspect the cost of doing the recall on each vehicle is more than $75.
Frankly, that is less per vehicle than you pay in documentation fees when you buy it (at least here, we pay about $150 for that).
This is a trivial amount of money if the point is to punish a company that has over $22 billion in cash on hand and a profit of $4.1 billion in 2014.
http://www.autonews.com/articl....
They'll pay it and move on, nothing will change. Fine them a billion dollars and then it would actually be real money.
Asymmetric information is a classic market failure, and automotive engineering is full of asymmetric information. Moreover, there are externalities, another classic market failure. Your Jeep's loss of control can cause my Chevrolet's trip into a brick wall, for example. Your Jeep's unregulated tailpipe emissions cause smog. Markets don't always (or even frequently) work well. But if you disagree, there are a few countries that offer unregulated free markets. I suggest moving to Somalia if you're an enthusiastic fan of free markets.
Undoubtedly, the free market will ultimately decide these things. However, I'd prefer that someone I care about NOT be the collateral damage that helps determine this. Many corporations lack values beyond profits. The idea of regulations and penalties (ignoring how effective it actually is) is to prevent unnecessary injury, death, etc by compelling these companies to behave by imposing monetary fines (the only thing they really understand or care about). Granted, as already posted by others, this fine is probably chump change.
So 'Jeep', which is an American brand (presumably manufactured in the US), fucks up again, following the recall/remote hack issue reported on /. on Friday, yet the summary decides to highlight Chrysler's Italian partner company FIAT.
Just as well some American administration can line their pockets with the proceeds from a few more fines, and screw the consumers who end up paying them 'cos they won't see them as a tax.
Whilst I'm all for selling safe products and abiding by whatever rules are in place for a particular market, if the US weren't one of the larger ones I'm sure most overseas companies would rather tell the US 'regulators' to go fuck themselves than do business there.
... you know things are going badly.
The company has never had a good reputation wrt quality control or longevity of its vehicles. Seems like little has changed when they stick a chrysler or jeep badge on some bodge up they designed in Turin.
Disclaimer: I'm neither an american nor italian, just someone who likes properly built cars.
Chrysler is not a partner of fiat, its a subsidiary and was sold to it by Merc a few years ago for a song.
I was going to buy one, but after looking at owner forums and discovering the problems and horrible service that most people are getting I ran away.
I really like the idea of a small sporty car, and I really wanted one, but not if Fiat cant figure out that you have to bend over backwards for customers and make sure they are happy. Apologize while you fix your screwups and do not try and push back fixing them.
I do give honda plusses there. Recalls are done fast and mostly right. Except the pain recalls. Honda has the crappiest paint in the entire automotive industry, and the recalls are repainting with the same low grade crap that will fail in another 5 years.
Do not look at laser with remaining good eye.
Undoubtedly, the free market will ultimately decide these things. However, I'd prefer that someone I care about NOT be the collateral damage that helps determine this. Many corporations lack values beyond profits
If they were truly motivated by profits, they would make a safe product. A safe product does not result in hundreds of millions of dollars in lawsuits over wrongful deaths.
Unfortunately, they are not JUST motivated by profits, but by profits THIS QUARTER. Who cares what happens the quarter after that. Nevermind that the guy in charge two quarters ago had the same mentality and now there is probably a sword of Damocles hovering above somewhere. We can't even really blame the company for this attitude. It is the company's investors, aka the American public, that demand profits every quarter at the expense of the future. America used to invest their money for long term growth, and this ultimately fed the growth of technology from the 50s through the 70s, but then Americans turned into Traders instead of Investors, and by demanding short term growth, we cripple, if not kill, long term growth. It has resulted in companies having to make poor decisions like eliminating research, outsourcing work to other countries, where it will be performed more cheaply this quarter, but result in huge maintenance costs due to poor quality in the next quarter, and so on and so forth.
To change this attitude, the majority of American public has to change their mindset about investing. We have to decide that we would rather have our money multiply by 10 over a 10 year period, than go up by half a percent this quarter. That a bird in the hand is not necessarily worth more than 1000 in the bush. That "me, me me, now, now now" is not a sustainable or desirable attitude.
If you are not allowed to question your government then the government has answered your question.
Chrysler didn't manage to get Daimler bankrupt, perhaps it can destroy another europan company?
You are aware that Chrysler's profits are actually propping up Fiat at the moment right? Fiat got control of Chrysler in a sweetheart deal. If they screw it up then the fault is on Fiat.
Oh, and Daimler's problems were because Daimler bungled the acquisition and completely disregarded the importance of culture. They never seriously tried to make it a unified company and basically drove Chrysler into the ground. The German management completely screwed up the Chrysler brand. That was a European company failing to understand the US market and US corporate culture. Fiat seems to be doing a better job of it but only time will tell for certain.
I'm Italian (near Turin, too). Jeep and RAM models where never designed here. Other (even worse) cars, yes, but not those.
Not true. The Jeep Renegade is built entirely in Melfi, Italy and is based on the GM Fiat Small platform.
The Ecodiesel engine in the current model Ram pickups and the Jeep Grand Cherokee was designed and built by VM Motori. They also have made engines for the Jeep Wrangler and Jeep Cherokee.
I was going to buy one, but after looking at owner forums and discovering the problems and horrible service that most people are getting I ran away.
My brother-in-law owned an Abarth for a few years just recently. It was fine and fun to drive. To my knowledge he had no substantial problems with it. One data point of course but a positive one.
Except the pain recalls. Honda has the crappiest paint in the entire automotive industry, and the recalls are repainting with the same low grade crap that will fail in another 5 years.
My daily driver right now is a Honda which I've had since 2009 and I've owned several over the years. Never had a problem with the paint. Again one data point but I'm not aware of any systemic problem with Honda's paint worse than any other major brand.
That'll be the FIAT that owns Ferrari and Maserati, which are quite well thought of.
They are well thought of because they are cool looking and very fast cars. Their reputation has NOTHING to do with their reliability or longevity. Most Ferrari's and Maseratis spend the majority of their life sitting in a garage somewhere not being driven. Nobody buys a Ferrari because they think it is going to have amazing reliability.
What if the defect is deadly. Sure if I am dead I cannot buy the product but being dead is not a solution.
putting the 'B' in LGBTQ+
"If they were truly motivated by profits, they would make a safe product."
In the real world corporations and the rich have always been happy to trade lives for profits or quarterly bonuses; hence we have FTC, FDA, OSHA, MSHA, FRRC, EPA, as well as state level agencies. See also the recent BP oil spill, the Piper Alpha disaster, salmonella outbreaks, and a host of others.
putting the 'B' in LGBTQ+
The other intesting thing is that before $4/gal oil Ford retooled to modernize and create options so they could move away from over reliance on SUVs. People at GM and Chrysler thought they were nuts. Then the recession hit and $4/gal gas. Of the big 3 they did not require a bail out.
I attribute it to being largely controlled by the Ford family which often produces motivated and capable execs. for the Company.
putting the 'B' in LGBTQ+
I guess someone didn't learn from the mistakes of the Fort Pinto. The Ford Pinto was known for a weak rear-mounted gas tank that if you got into a rear-end collision you ended up with a first-rate barbecue with the passengers of the Pinto as the main course.
What the FIAT acronym means: Fix It Again Tony.
Mastering the English language is fucking easy: all you have to do is to put an f* word in every fucking sentence.
Add a zero to the dollar amount of the fine, and you're finally out of the 'Cost of Doing Business' category and into bottom-line devastation that will command the attention of both C-levels and shareholders. The government needs to grow a pair and serve notice to industry that business-as-usual just won't cut it.
'The Economy' is a giant Ponzi scheme whose most pitiable suckers are the youngest among us and the yet-unborn.
So given this... and Honda's mention about a big fine... What company(s) has the best track record for A) Fewest required recalls, B) Fewest recall violations, and C) Safety record?