UPDATED: 8/14/14 9:33 am ET - corrected
Editor's note: Hyundai agreed to pay a $17.35 million fine last week for delaying the 2013 recall of the Genesis sedan for a braking defect. The name of the vehicle was incorrect in previous versions of this story.
DETROIT -- Chrysler Group tapped its head of purchasing to lead a new office that will oversee safety issues and regulatory compliance as scrutiny over the industry’s safety record grows.
In the new role, Scott Kunselman, who succeeded the late Dan Knott as purchasing boss in 2012, will report directly to CEO Sergio Marchionne, Chrysler said today. Tom Finelli, 44, Chrysler’s current director for global standardization, will assume responsibility for North American purchasing and supplier quality, effective immediately, Chrysler said in a statement.
Chrysler joins General Motors in creating a high-profile position devoted to safety issues. In March, GM named Jeff Boyer as vice president of global vehicle safety as its recall crisis escalated.
Chrysler said its moves “will help intensify the company’s continuing commitment to vehicle safety and regulatory compliance.” The actions will also focus engineering resources on product development, Chrysler said.
Prior to his move to purchasing, Kunselman, 51, was senior vice president for engineering, a position that included oversight of regulatory compliance.
Separately, Chrysler named John Nigro, as head of NAFTA product development.
Nigro, 54, succeeds Mark Chernoby, who was named chief operating officer for product development, assuming global oversight of Chrysler and Fiat’s combined engineering and development organizations across its four business regions.
Nigro has been with Chrysler since 1984. Most recently, he was vice president for systems and component engineering, a position he had held since April 2013.
Finelli inherits responsibility for a purchasing organization that hasn’t made progress on its relations with key suppliers since the retirement and death of the late Dan Knott in 2012.
Chrysler fared poorly in the latest supplier survey by Planning Perspectives Inc. and its boss, John Henke, earlier this year. It finished just one point out of last place, ahead of only General Motors, among the six largest North American automakers in suppliers’ assessments of the automakers’ purchasing operations.
Henke said Chrysler’s buyers “are the weakest link in their supplier relations.” At the time of the report, Chrysler attributed its poor showing to a glitch-filled rollout of a new online vendor payment system, as well as rising production levels.
Chrysler’s supplier relations may have taken another hit last week when Marchionne told analysts and journalists on a conference call that he wanted to share in the double-digit profit margins of some of his suppliers. The Chrysler CEO’s off-the-cuff comments drew sharp responses from executives across the automotive supply industry, who said that the comments could result in Chrysler being shut out of their top new technologies.
GM’s recalls have thrust safety practices across the industry into the spotlight, as federal regulators -- themselves under scrutiny for failing to demand action from GM sooner -- and members of Congress try to keep other defects from slipping through unnoticed.
Two U.S. senators in July introduced a bill that would make it a crime for corporate executives to conceal dangerous defects in their products. Another bill, introduced this month by Sen. Claire McCaskill, D-Mo., would allow penalties up to life in prison for executives who delay recalls that result in fatalities and would remove the maximum on the amount automakers could be fined.
Such fines are currently capped at $35 million, which is the amount that GM agreed to pay in May, but safety advocates say that’s not enough to act as an effective deterrent. The National Highway Traffic Safety Administration last week fined Hyundai Motor Co. $17.35 million for waiting too long to recall Genesis sedans with defective brakes.
Chrysler, too, has had its run-ins with NHTSA of late. The safety regulator sent the automaker a letter in early July accusing Chrysler of dragging its feet on efforts to improve the crash worthiness of older model Jeep Grand Cherokees and Libertys.
In June 2013, Chrysler had agreed to install trailer hitch assemblies on 1993-98 Grand Cherokees and 2002-07 Libertys to provide additional protection to the vehicle’s rear-mounted gas tanks in low-energy rear impacts. However, production of the parts needed to conduct the recall didn’t begin until May 2014, and at a rate that NHTSA said would take too long to effectively conduct the recall.
In its response to NHTSA, Chrysler said it had contracted for additional production and planned to begin recalling the vehicles in August.
So far this year, Chrysler has announced 17 recall campaigns, involving 3.2 million vehicles.
Nick Bunkley contributed to this report.