Hit with the largest package of fines and penalties ever levied by federal regulators, Fiat Chrysler Automobiles is under the microscope as federal regulators press it to change what they describe as a malfunctioning safety program.
Among other things, the maker will have to buy back perhaps several hundred thousand vehicles, and its safety program will be monitored by an independent outsider.
“That’s not something we fear,” insists the executive who has been appointed within FCA to get its safety efforts back on track.
“We’re focused now on getting fixes into the customer’s hands as quickly as possible,” and making sure that there are no delays when future safety problems are uncovered, said Scott Kunselman, the senior vice president of vehicle safety and regulatory compliance at the trans-Atlantic automaker.
The auto industry, as a whole, has come under the microscope over the last year, with regulators, lawmakers and consumers alike demanding answers after a series of major safety lapses that included a defective General Motors ignition switch now blamed for more than 120 deaths, and faulty Takata airbags that have triggered the recall of more than 40 million vehicles worldwide.
Fiat Chrysler’s problems are similar to those at GM, in that both companies are accused of playing down or ignoring safety issues. And FCA’s follow-up with customers when safety issues were identified and acknowledged was spotty at best, federal regulators say.
Mark Rosekind, administrator of the National Highway Traffic Safety Administration (NHTSA), last week described a hearing the previous month to look at Fiat Chrysler’s handling of 23 separate recalls.as “unprecedented.” At the hearing, testimony showed that some of the recalls were delayed long beyond what federal law mandates. In others, Fiat Chrysler was accused of taking a lax approach to ensuring vehicles actually were repaired. Barely 20 percent of the Jeep’s covered by a 2013 service action due to concerns about fires in rear-end crashes have so far been fixed.
Then, on Sunday, NHTSA announced it had reached a consent order that will see FCA pay $105 million and take other steps to speed up repairs, including vehicle buybacks.
FCA officials declined to discuss how the venerable U.S. automaker’s safety operation became so problematic. But industry observers say that its ill-fated merger and subsequent breakup with Daimler-Benz, aggressive cost-cutting and loss of talent prior to its 2009 declaration of bankruptcy and upheaval surrounding its acquisition by Fiat all undoubtedly played a role.
There are indications, however, that the company has become serious about addressing its safety lapses.
Just a few days before that announcement of the concent decree, Rosekind appeared to hold out an olive branch to the troubled automaker, noting that Fiat Chrysler CEO Sergio Marchionne was taking the right sort of steps to transform his company’s safety culture. Such a move “would allow Chrysler and NHTSA to work closely (together),” he said.
That’s certainly the automaker’s goal, Kunselman said in his first interview since the consent order was announced.
The automotive veteran was appointed to his post nearly 11 months ago, but he was more than just the latest in line. The safety post itself was elevated substantially within the FCA hierarchy. Kunselman’s predecessors had to go through three layers of management to get anything done at the highest level, while he reports directly to Marchionne.
That alone won’t fix the problem, Kunselman acknowledged. FCA needs to rethink its entire approach to safety. Among other things, he said, “Executional details were a challenge for us.” Not only did FCA miss some problems, critics contend, but it didn’t act with necessary haste once a safety problem was uncovered.
“If they (FCA) really want to do the right thing they have a lot of skeletons in closet they have to deal with.”
Kunselman said FCA is studying the steps rival GM has taken since its safety problems came to light in early 2014. It remains to be seen if that will mean a flood of new recalls in the months ahead, as occurred at GM after the ignition switch problem surfaced, with the automaker eventually issuing recalls for numerous safety problems covering more than 30 million vehicles.
But Clarence Ditlow, the director of the Center for Automotive Safety, suggested that, like GM, “If they (FCA) really want to do the right thing they have a lot of skeletons in closet they have to deal with,” referring to the extensive recalls that followed the initial action over the ignition switch problem.
The normally critical Ditlow, nonetheless, said he was cautiously optimistic “Chrysler has changed.”
One of the steps Kunselman said FCA needs to take is to increase “transparency.” It must be far more open, both internally and externally, about its safety problems. Among other things, it will have to keep in closer touch by more readily sharing data with NHTSA.
Another step will be finding ways to get more recalled vehicles fixed – and as quickly as possible. That can be a major challenge, he cautioned, when dealing with older vehicles.
Some of the Jeeps covered by the fire recall, for example, are now more than 20 years old. Replacement parts are, in many cases, long out of production. And, in other instances, all new parts must be designed and produced.
In the past, that was a slow, step-by-step process that required figuring out the problem, designing the part, engineering it, then tooling and building the pieces. But Kunselman said FCA is taking a new approach to speed the fixes.
“While we’re testing something we’re already running the tooling (of the replacement parts),” he said. “It’s all about time enhancement … which will make a clear improvement in time to market.”
During an interview in Detroit last week, NHTSA’s Rosekind warned that the agency could yet go back and hold hearings on more FCA recalls. And it could add to the $70 million fine it already imposed under the consent decree, which also requires the automaker to establish a $20 million "education fund" and includes another $15 million in penalties that will be paid if FCA doesn’t get things right going forward.
That’s not going to happen, said Kunselman, insisting he and Rosekind are now “on the same page.”
After getting harshly criticized for its past safety efforts, the automaker is winning cautious praise for the moves it is now making. But it will have to prove those steps will actually result in concrete change.
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