By Larry P. Vellequette, Crain News Service
WASHINGTON (June 5, 2013) — In what some term a rare move, Chrysler Group L.L.C. said June 4 that it does not intend to honor a request from the National Highway Traffic Safety Administration (NHTSA) to recall as many as 2.7 million Jeep Grand Cherokee and Liberty SUVs.
NHTSA said a recall is needed to address safety problems with the vehicles' fuel systems.
Chrysler said it had received a letter June 3 from NHTSA proposing a recall of 1993-2004 Grand Cherokee and 2002-2007 Liberty vehicles, which the agency said have defective fuel systems that pose an unreasonable risk to safety in rear-impact collisions.
The auto maker said in a statement that it has been sharing data on the issue with NHTSA 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," Chrysler said in the statement.
"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 statement said.
In a related document, Chrysler argued that its analysis showed fire incidents involving the named vehicles occurred "less than one time for every million years of vehicle operation."
But in the letter to Chrysler, dated June 3, NHTSA said its investigation "revealed numerous fire-related deaths and injuries," and the agency's defect investigation office believes that the vehicles "contain defects related to motor vehicle safety."
The government's top auto safety official reiterated concerns about the Jeep vehicles in a statement issued late June 4.
"Our data shows that these vehicles may contain a defect that presents an unreasonable risk to safety, which is why we took the next step of writing Chrysler," NHTSA Administrator David Strickland said in a statement.
"The driving public should know that NHTSA is actively investigating this issue and is requesting that Chrysler initiate a safety recall and notify all affected owners of the defect. NHTSA hopes that Chrysler will reconsider its position and take action to protect its customers and the driving public."
It is rare for an auto maker to deny a request from NHTSA for a recall, said Allan Kam, a former senior enforcement attorney at the agency.
The main reason is that NHTSA has the authority to order an auto maker to recall their cars. Usually, if a car company initially refuses to recall its cars, the company will later settle with NHTSA to minimize costs and unfavorable publicity.
"Even if they believe in their hearts that a safety-related defect does not exist, a manufacturer will not get involved in a public controversy with the agency over 70,000 vehicles," Mr. Kam said. "When you're talking about millions of vehicles, and hundreds of millions or even billions of dollars, those are the rare occasions where a manufacturer digs in their heels."
By refusing to recall the vehicles, Chrysler will avoid those costs for the time being—and avoid giving legal ammunition to Jeep owners who are suing over accidents in which their vehicles caught fire. To go along with NHTSA's request, Chrysler would need to send Jeep owners a letter saying their cars have a safety-related defect. Chrysler has insisted, including in a June 4 white paper, that they do not have a defect.
"I think a jury would give such a letter a lot of weight," Mr. Kam said.
Push for recall
An influential safety advocate has been pushing for the recall.
Clarence Ditlow, executive director of the Center for Automotive Safety (CAS), wrote a letter to NHTSA director David Strickland in May 2012 to alert him to the high number of most harmful event, or MHE, rear impact fire crashes reported in 1993-2004 Jeep Grand Cherokees.
Mr. Ditlow said testing by the Federal Highway Administration and the CAS show that the Grand Cherokee suffered catastrophic fuel system failures at energy levels far below NHTSA standards.
Mr. Ditlow urged NHTSA to order a mandatory safety recall if Chrysler refused to voluntarily recall the vehicle.
When reached for comment June 4, Mr. Ditlow accused Chrysler of putting profits before safety.
"When you get right down to it, the U.S. government bailed out Chrysler. Chrysler's since paid the money back, but there would be no Chrysler but for the U.S. government," he said. "The way I look at it is, Chrysler owes the American public a recall."
He also issued a scathing statement on his website.
Since September 2010
Chrysler was first notified of NHTSA's inquiry in September 2010.
The vehicle maker so far has been subjected to about a half-dozen private lawsuits regarding incidents with the fuel systems on the vehicle in question. All of the lawsuits remain active and none has been settled, a spokesman said on background.
Chrysler's analysis of NHTSA data, which it released with its statement, found that several vehicles from the era had higher incidence rates of fatal crashes than did the Grand Cherokee or the Liberty.
A source, speaking on background, said the two Jeeps exceeded the crash standard in place at the time, which allowed for some fuel leakage in a 30 mph crash. The Jeeps were designed to a standard that allowed no fuel leakage in a 30 mph crash.
The crash standard for rear collisions was doubled in 2008.
The source also said that calls to move the gas tank from behind the rear axle to a position between the axles would lower the incidence rate of fires from rear crashes. However, doing so would increase the incident rate of fires from side crashes, which are more prevalent, the source said.
Chrysler has until June 18 to issue a formal reply to NHTSA. The source indicated that the auto maker would share its analysis with the agency, but that it couldn't conduct a recall because it did not have a defect to fix.
In a prepared statement, Chrysler CEO Sergio Marchionne said that safety of drivers and passengers is the auto maker's first priority. But, he said, "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."
Doug Betts, Chrysler's head of quality, spoke to Automotive News last month about the company's recalls and how it deals with consumers.
At the time, Mr. Betts said Chrysler had issued 52 recalls of its products during the last three years, and that 49 of those were begun by Chrysler identifying a problem and notifying NHTSA of its intent to carry out a recall.
In the same interview, which appeared in Automotive News on May 27, Mr. Betts was asked whether the way Chrysler deals with consumers had changed.
He responded: "It's a night-and-day difference, and I'll credit Mr. Marchionne with setting the example. He follows a very simple rule: Treat people the way that you would want to be treated. Whenever anything comes up, he doesn't ask how much it costs or anything. He says, 'If I were them, would I want it fixed?' And if the answer is yes, then we fix it."
Reporter Gabe Nelson contributed to this report, which appeared in Automotive News, a Detroit-based sister publication of Tire Business.