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Chrysler Fights Feds Request for Jeep Recall

Tuesday, 4 Jun 2013 | 5:54 PM ET
NHTSA Recall? Chrysler Says No
Tuesday, 4 Jun 2013 | 2:26 PM ET
NHTSA tells Chrysler there's a problem with the gas tank on 2.7 million Jeeps, but Chrysler refuses to comply. The two sides will talk and attempt to come to a solution, reports CNBC's Phil LeBeau.

In a highly unusual move for an automaker, Chrysler is fighting a request from the federal government to recall 2.7 million Jeep vehicles.

The National Highway Traffic Safety Administration (NHTSA) asked Chrysler to recall the Jeep models in question because of concerns the fuel tank may leak and contribute to deadly fires if the vehicles are hit in a rear-impact crash.

Chrysler is still formulating a formal response for the federal government, but already started disputing the need for a recall in a press release Tuesday.

It's unclear how the dispute will be resolved or how long the two sides will battle over the safety of two popular Jeep models.

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The NHTSA request involves 2.7 million Jeeps. Specifically, 1993-2004 Grand Cherokee models and 2002-2007 Liberty models. All of the vehicles have fuel tanks that are located behind the rear axle. According to the NHTSA, 51 deaths have been linked to rear-impact crashes where those models caught on fire after being hit.

Chrysler Jeep Grand Cherokees from 1993-2004 are part of the recall by the U.S. safety regulators. Chrysler is disputing the decision.
Getty Images
Chrysler Jeep Grand Cherokees from 1993-2004 are part of the recall by the U.S. safety regulators. Chrysler is disputing the decision.

The letter from the federal safety agency outlines the problem saying: "The performance defect is that the fuel tanks installed on these vehicles are subject to failure when the vehicles are struck from the rear. Such failure can result in fuel leakage, which in the presence of external ignition sources, can result in fire. The design defect is the placement of the fuel tanks in the position behind the axle and how they were positioned, including their height above the roadway."

The NHTSA does not specify what remedy it believes Chrysler should pursue to fix the problem it alleges.

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

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In a written statement, Chrysler CEO Sergio Marchionne defended the safety of the Jeep models in question saying: "The safety of drivers and passengers has long been the first priority for Chrysler brands and that commitment remains steadfast. 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."

The 2.7 million Jeeps met federal vehicle safety standards when they were manufactured. The NHTSA agrees with this claim in its letter to Chrysler, but doesn't think that is enough. "The existence of a minimum standard does not require NHTSA to ignore deadly problems."

In a statement late Tuesday, NHTSA Administrator David Strickland said the agency's data show "these vehicles may contain a defect that presents an unreasonable risk to safety" and it "hopes that Chrysler will reconsider its position and take action to protect its customers and the driving public."

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. In addition, without a formal remedy suggested, the question becomes how would Chrysler ensure the safety of the Jeeps.

It's rare when a vehicle manufacturer balks at a NHTSA request for a recall.

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Every year, there are dozens of recalls and most of the time the federal government, automakers and parts suppliers hold numerous discussions about the specific problem and how to fix it.

As one industry veteran described it, there's a healthy and vigorous debate, but eventually everyone involved agrees to a solution.

That's what makes Chrysler's response to the recall request so unusual. It is challenging the evidence, including pictures of many horrific fatal accidents, collected by the NHTSA.

Eventually, Chrysler and the NHTSA are likely to negotiate some type of settlement. If not, the matter could play out in a public hearing and be decided in court.

_ By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews

Questions? Comments? BehindTheWheel@cnbc.com

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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