Chrysler’s Challenge to NHTSA Recall Request Raises Issues

At Issue: Chrysler Says its Vehicles are Safe but Is That Enough?

On Mon­day, June 3, 2013, the NHTSA sent a letter of request to Chrysler Group LLC  seek­ing the recall of the 1993–2004 Jeep Grand Chero­kee and the 2002–2007 Jeep Lib­er­ty. Chrysler has since denied com­pli­ance with the recall request, rais­ing sev­er­al issues that are cur­rent­ly unre­solved.

Chrysler Group’s posi­tion on this mat­ter is clear:

  • Chrysler Group has been work­ing and shar­ing data with the Agency on this issue since Sep­tem­ber 2010. The com­pa­ny does not agree with NHTSA’s con­clu­sions and does not intend to recall the vehi­cles cit­ed in the inves­ti­ga­tion. The sub­ject vehi­cles are safe and are not defec­tive.
  • We believe NHTSA’s ini­tial con­clu­sions are based on an incom­plete analy­sis of the under­ly­ing data, and we are com­mit­ted to con­tin­ue work­ing with the Agency to resolve this dis­agree­ment.
  • “The safe­ty of dri­vers and pas­sen­gers has long been the first pri­or­i­ty for Chrysler brands and that com­mit­ment remains stead­fast,” said Ser­gio Mar­chionne, Chair­man and CEO of Chrysler Group LLC. “The com­pa­ny stands behind the qual­i­ty of its vehi­cles. All of us remain com­mit­ted to con­tin­ue work­ing with NHTSA to pro­vide infor­ma­tion con­firm­ing the safe­ty of these vehi­cles.”

Chrysler put its rep­u­ta­tion for safe­ty and qual­i­ty on the line when it said it would defy a fed­er­al request to recall 2.7 mil­lion Jeep Grand Chero­kees and Jeep Lib­er­tys over deaths from rear-end col­li­sion fires.

  • On Mon­day, the Nation­al High­way Traf­fic Safe­ty Admin­is­tra­tion said in a let­ter to Chrysler that gas tanks mount­ed behind the rear axle was a design flaw that con­tributed to fatal fires, killing 51 peo­ple in 37 acci­dents involv­ing Jeep Grand Chero­kees for mod­el years 1993–2004 and Jeep Lib­er­ty SUVs for mod­el years 2002–2007.
  • Chrysler has since designed the mod­els with the fuel tanks in front of the rear axle.
  • Ser­gio Mar­chionne, chair­man and chief exec­u­tive offi­cer of Chrysler and its major­i­ty own­er, Italy’s Fiat SpA, said the Auburn Hills, Michi­gan-based automak­er “stands behind the qual­i­ty of its vehi­cles.” Chrysler in a report called the SUVs “among the safest vehi­cles of their era.”

Chrysler has until June 18 to issue a for­mal response explain­ing why it will not com­ply with the recall request.

So why is Chrysler chal­leng­ing the recall?

A source famil­iar with the sit­u­a­tion, who asked to remain anony­mous, says the automak­er believes the rate of fatal rear-impact crash­es for the Jeeps is no greater than the fatal­i­ty rate for oth­er vehi­cles involved in rear-impact crash­es that result in a fire.

At issue is how to mea­sure fatal­i­ty rates for vehi­cles. When tak­ing a look at the num­ber of fatal rear-impact crash­es per mil­lions of miles dri­ven, the Jeep rate, accord­ing to sources, is low­er.

EDITORIAL NOTE: Chrysler has said it believes most of the fatal­i­ties involved high speed and does not con­sti­tute a design flaw. Chrysler, in a report, called the SUVs “among the safest vehi­cles of their era.”

Alec Gutier­rez, senior mar­ket ana­lyst for Kel­ley Blue Book, com­ments on the impact of the NHT­SA-request­ed Jeep recall on resale val­ues:

“When a NHT­SA-request­ed recall is left unad­dressed, as is cur­rent­ly tak­ing place with the 1993–2004 Grand Chero­kee and 2002–2007 Jeep Lib­er­ty, we could see val­ues dip if con­sumers lose faith in the safe­ty and qual­i­ty of their vehi­cle. Only time will tell how sig­nif­i­cant­ly val­ues will be affect­ed if at all, but at the moment, we have not seen any indi­ca­tion of price soft­en­ing in any of our data. We should have a bet­ter sense of how these val­ues have shift­ed over the next sev­er­al weeks and months.”

 

 

 

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