The U.S. auto safety watchdog, toughening its stance against manufacturer defects, announced on Sunday a record $105 million in fines against Fiat Chrysler Automobiles NV (FCHA.MI) over lapses in safety recalls involving millions of vehicles.
The Italian-U.S. automaker's consent agreement with the National Highway Traffic Safety Administration contains an unprecedented buyback option covering hundreds of thousands of vehicles, including more than 1 million Jeep sport utility vehicles, whose owners can receive a trade-in or a financial incentive to get their vehicles repaired.
Fiat Chrysler also agreed to submit to an independent monitor's audit of its recall performance over a three-year period.
The $105 million in fines sets a new standard for NHTSA's dealings with car manufacturers, eclipsing the previous record fine of $70 million imposed against Honda Motor Co (7267.T) in January for failing to report death, injury and other claims.
Last year, General Motors Co (GM.N) was ordered to pay $35 million for a decade-long delay in reporting faulty ignition switches tied to more than 120 deaths.
NHTSA has taken a more aggressive enforcement posture under its new administrator, Mark Rosekind, after coming under fire from leaders of both parties in Congress for lapses in its handling of deadly defects, including Takata Corp (7312.T) air bag inflators and GM ignition switches.
"Fiat Chrysler's pattern of poor performance put millions of its customers and the driving public at risk," Rosekind said in a statement. "This action will provide relief to owners of defective vehicles, will help improve recall performance throughout the auto industry, and gives Fiat Chrysler the opportunity to embrace a proactive safety culture."
The recalled vehicles covered by the agreement include Dodge Ram, Dakota and Chrysler Aspen trucks from model years as early as 2008. More than half a million of the vehicles subject to buybacks have faulty suspension parts that can cause a loss of control.
Fiat Chrysler's U.S. unit FCA US LLC, formerly Chrysler Group LLC, said it accepted the consequences of the agreement with "renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us."
The fines include a $70 million cash payment, an agreement that Fiat Chrysler will spend $20 million improving its recall process and an additional $15 million payable if the automaker is found to have committed any further violations.
The two sides have been engaged in discussions since NHTSA held a July 2 public hearing on Fiat Chrysler's recall performance. At the proceedings, NHTSA staff cataloged alleged failures in 23 separate recalls including what they termed misleading behavior, while an FCA executive pledged to work with the agency to improve the automaker's recall programs.
Fiat Chrysler has had a contentious relationship with NHTSA for years, pushing back on the agency's efforts to secure recalls and threatening lawsuits to avoid mandatory action, according to former auto regulators.
Fiat Chrysler Chief Executive Sergio Marchionne told reporters this month that the company needs to change the way it deals with regulators going forward.
"We are intent on rebuilding our relationship with NHTSA," the automaker said on Sunday.
