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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.
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.
Recalls, according to TFA, are for models from 2003 to 2012. Chrysler acquisition started in 2009, but was completed only in 2014. Just to have our facts right.
Disclaimer: I'm Italian (near Turin, too). Jeep and RAM models where never designed here. Other (even worse) cars, yes, but not those.
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.
"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+