WASHINGTON — Fiat-Chrysler will buy back some recalled vehicles, offer bonuses on trade-ins for other vehicles and pay a record fine as part of a sweeping settlement with the federal government over its handling of 23 vehicle safety recalls covering more than 11 million defective vehicles.
The details of the settlement were announced on Sunday.
"Fiat-Chrysler's pattern of poor performance put millions of its customers, and the driving public, at risk," said NHTSA Administrator Mark Rosekind 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 automaker must pay a $70-million cash penalty, part of a potential $105-million civil penalty, the largest ever imposed by NHTSA.
Fiat-Chrysler also agreed to accept three years of oversight by an independent monitor and may have to pay another $15 million if it violates the terms of the consent order or if the monitor discovers additional violations of U.S. safety laws.
The automaker must spend another $20 million to meet performance requirements spelled out by the consent agreement, NHTSA said.
Fiat-Chrysler admitted that it failed to adequately remedy defective vehicles and failed to notify vehicle owners in a timely manner of the existence of a defect, according to the consent order.
The automaker issued a statement on Sunday saying it "acknowledges the admissions in the consent order."
"We also accept the resulting consequences with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us," Fiat-Chrysler said.
"We are intent on rebuilding our relationship with NHTSA and we embrace the role of public safety advocate."
The announcement is seen as a victory for consumers and a warning for other automakers.
"Today's action holds Fiat-Chrysler accountable for its past failures, pushes them to get unsafe vehicles repaired or off the roads and takes concrete steps to keep Americans safer going forward," said U.S. Transportation Secretary Anthony Foxx in a statement. "This civil penalty puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously."
Owners of more than half a million vehicles with defective suspension parts that could cause the vehicle to lose control will have the opportunity to sell their vehicle back to Fiat-Chrysler as part of the settlement, NHTSA said.
In addition, owners of more than a million Jeeps that are prone to deadly fires either will have the chance to trade their vehicle in for above its market value or will receive a financial incentive to get their vehicle remedied. Affected vehicles include the 1993-'98 Jeep Grand Cherokee SUV and 2002-'07 Jeep Liberty SUV.
Owners can expect a $1,000 bonus on trade-ins.
The consent agreement posted on the NHTSA Web site said that eligible owners can expect to be notified of further details within 60 days of Fiat-Chrysler amending its formal Part 573 recall reports.
"The consent order requires FCA to notify vehicle owners eligible for buy-backs and other financial incentives that these new options are available," NHTSA said.
Fiat-Chrysler must pay the purchase price minus "a reasonable allowance for depreciation," the consent order said. The automaker will give a 10 percent bonus to owners who did not have the recall repair completed.
Fiat-Chrysler will be allowed to repair the affected vehicles and to resell them.
Edmunds says: This is part of a larger move by the federal government to overhaul safety and recall practices in an era of record recalls.