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Chrysler U-Turn and Agree to Recall 2.7m Jeeps

Our blog has contained many stories about product recalls in the automotive industry over the last couple of years, mostly involving Japanese manufacturers.  In the majority of these stories, the manufacturers concerned have been very proactive in recalling large numbers of cars for relatively minor problems before any serious accidents occur.  The unfolding saga of the Chrysler Jeep recall has taken a somewhat different course though.

The US National Highway Traffic Safety Administration (NHTSA) asked Chrysler to initiate a voluntary recall of a range of Jeep Grand Cherokees and Jeep Libertys on the 4th of June because of safety concerns about the fuel tank.  However, despite the NHTSA’s claims that these models have fatal crash rates that are about double those of similar vehicles; Chrysler initially refused to recall them.  Then, on the 18th of June, Chrysler changed their mind and announced that whilst “These vehicles are not defective and are among the safest in the peer group”; they recognise that “This matter has raised concerns for its customers” and they want to “Take further steps, in co-ordination with NHTSA, to provide additional measures to supplement the safety of its vehicles.”

The reasoning for this sudden u-turn is unclear: there is certainly no evidence of any new data becoming available over the intervening two weeks (NHTSA’s investigation started in 2010).  So far the market seems unimpressed with the company’s handling of the incident, with Daimler shares losing nearly 7% of their value over the period 17th to 20th June (having already lost 4% when the NHTSA initially asked for the recall).