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.”