Defiant Chrysler Says No to Recall Request

Jun 5, 2013 8:01am

Morning Business Memo …

Chrysler has made a very unusual act of defiance. The National Highway Traffic Safety Administration sent the firm a letter requesting the recall of 2.7 million Jeeps. But Chrysler challenged the regulator’s analysis of collision data, saying the Jeeps are safe and it would not honor the request.

NHTSA said the rear-mounted gas tanks in the vehicles were too vulnerable to leaking and could catch fire in a rear-end crash. The Jeeps covered by the request were 1993-2004 Jeep Grand Cherokees and 2002-2007 Jeep Libertys.

RELATED:  Chrysler Resists US on Recall of Some Older Model Jeeps

Such a refusal by an auto company is rare. NHTSA can order a recall but needs a court order to enforce it.

David Strickland, the agency’s administrator, said in a statement that he hoped Chrysler would reconsider its decision.

“Our data shows that these vehicles may contain a defect that presents an unreasonable risk to safety,” he said.

NHTSA opened an investigation into the Jeeps in August 2010 at the request of the Center for Auto Safety, a consumer advocacy group. Clarence Ditlow, the center’s director, has repeatedly sent letters to Chrysler seeking a recall.

The agency found that the Jeeps’ fuel tanks can fail when hit from the rear, leak fuel and cause fires if there’s an ignition source. The placement of the tanks behind the rear axle and their height above the road is a design defect, NHTSA said.

Chrysler moved the fuel tanks on the Grand Cherokee ahead of the rear axle in 2005, and did the same thing with the Liberty in 2007. But retrofitting the older Jeeps with repositioned tanks would be very expensive. In 2011, when Toyota recalled 1.7 million cars for possible fuel leaks from loose fuel pressure sensors, an analyst estimated the cost at $240 million.

Toyota has issued a new recall affecting more than 240,000 cars around the world. The world’s biggest automaker said a faulty brake system made of a weak material in Prius and Lexus models could cause pressure parts to crack because of vibration, slowing response times. The company said no accidents or injuries have been reported so far.

Toyota suffered a blow to its reputation from a series of massive recalls in 2009 and 2010, including faulty braking, sticky gas pedals and defective floor mats.

Samsung Electronics has won the latest round of its global international patent battle with Apple. The U.S. International Trade Commission has ruled that Apple infringed Samsung’s patents. The decision would ban imports of some older model iPhones and iPads unless Apple wins in appeals court or the ruling is vetoed by President Obama. The ITC said its ruling is final.

The devices that would be banned include AT&T versions of the iPhone 4, 3GS, and several types of iPads. But the latest generation Apple phones and tablets would not be affected by the ruling.

“We are disappointed that the commission has overturned an earlier ruling and we plan to appeal,” said an Apple spokeswoman.

A Wall Street winning streak is over. The Dow Jones index rose for 20 Tuesdays in a row. But this week, on Tuesday, the averages dropped. The Dow had a 76-point loss. Stock futures were down this morning. Most overseas markets were lower today.

The president of the Kansas City Fed added to speculation that the central bank’s bond-buying program could be reduced in size. Esther George spoke of improving economic conditions and said she supported slowing the pace of asset purchases. George is among the skeptics of the current policy.

Market analysts say disappointment at Japan’s latest package of measures designed to boost its economy along with concerns over Fed policy were pushing stocks down today.

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