So who won the Chrysler-NHTSA recall fight?Larry P. Vellequette
DETROIT -- Now that Chrysler Group has agreed to inspect and modify as many as 1.56 million older-model Jeep SUVs at the request of federal regulators, one inevitable question remains.
Did the National Highway Traffic Safety Administration win? It did get Chrysler to agree to act after almost three years of questions into whether 1993-2004 Grand Cherokees and 2002-07 Libertys had a propensity to catch fire during rear-end collisions.
But the agreement with Chrysler also means that NHTSA won't have to go to court to defend its analysis that the two SUVs' safety record is worse than that of other vehicles from that era. Doing so would expose the agency to legal discovery, where any other motivations -- including political ones -- for requesting the recall might see the light of day.
Did Chrysler win? After mounting a vehement defense of its position earlier this month and promising to fight, the automaker looks on the surface like it folded like an old rug.
Look a little deeper, however, and Chrysler's potential financial exposure shrank precipitously.
Adding trailer hitch assemblies to the affected Grand Cherokees and Libertys that didn't already have them is a relatively cheap fix. Going only by the Mopar parts online catalog, the hitch assemblies for those vehicles look like they can be installed for a little more than $150 per vehicle retail, with labor. Plus, by using parts out of the bin, there are no additional engineering costs involved.
Assume a maximum 80 percent take rate on the recall, plus the fact that some of those vehicles are already 20 years old, and Chrysler's total exposure is maybe $120 million to $150 million.
That's certainly not chump change, but it's also well short of a year's profit. And biting the bullet now mitigates any damage to the Jeep brand over the short and long term, a salve that carries its own value in Auburn Hills and Turin as Fiat and Chrysler consummate their marriage.
So who's left to walk away victorious?
Probably not the trial lawyers. The agreement allows Chrysler to maintain its stance that there is no defect with the Jeeps, and the automaker's "voluntary actions" make it harder to argue that Chrysler has thumbed its nose at safety. Sure, the dozen or so active suits will go on, but the agreement likely won't have a lasting impact on the litigation.
That leaves dealers and consumers, both of whom will walk away with at least a little something.
Dealers are likely to see a boost of fresh, factory-paid warranty work back in the service area. They'll also get a nice big batch of potential customers, all of whom should be ready for new Jeeps, given the age of the vehicles.
And consumers? Well, they'll get a free trailer hitch if they don't already have one, which maybe makes their aging SUVs slightly more valuable on the resale market.
But what consumers won't get is a real solution if indeed their vehicles are more prone to fires after rear-end collisions, as NHTSA argues.
Because the way I see it, that trailer hitch won't provide much more protection from fire in a high-energy rear-impact crash than was there before.
It's just a very convenient component that allows the parties to walk away from this conflict with a feeling that they've won.