Jeep recall costly but so is the PR damage

Emily Amato

This post is courtesy of Jayne O'Donnell and originally appeared on USA Today.

June 5, 2013

Chrysler's refusal to recall 2.7 million Jeeps may carry a high public relations price, but doing the recall could be even costlier - for both Chrysler and the Obama Administration, experts say.

The National Highway Traffic Safety Administration asked Chrysler late Monday to recall 1993 through 2004 Jeep Grand Cherokees and 2002 through 2007 Jeep Libertys because of the risk of fatal fires in rear-end crashes.

"The publicity is going to get worse for Chrysler," says Allan Kam, a former NHTSA senior enforcement attorney. The public relations cost is one reason "manufacturers will acquiesce and conduct a recall even if they don't happen to agree with it."

Making matters worse: One of the points Chrysler will have to emphasize could be uncomfortably graphic. Because the fires occur in high speed crashes, victims may have died due to the crash forces before the vehicles caught fire. That's an important distinction in product liability lawsuits, but its significance may be lost on consumers.

Bad press aside, "maybe they don't know quite what the fix. Is," says Kam.

If there's no logical way to fix vehicles - such as by moving the gas tanks - buying them back could be the only option. That would be prohibitively expensive, even at the low value of the 20 year old vehicles today. A buyback would cost the company thousands for every vehicle a customer wanted bought back.

Another possibility could be one discussed for General Motors' Chevrolet pickup trucks in the early 1990s: A metal plate that protects the fuel tank in rear crashes. The Center for Auto Safety's Clarence Ditlow says up to 15% of the affected Jeep already have a three millimete steel plate that "does a pretty good job of protecting the tank." Still, the vehicles still need a good safety valve to prevent gas from spilling out if the filler hose pulled out, he says.

But even that could be costly given the nearly 3 million vehicles involved.

In an eeriely similar case, NHTSA threatened to sue GM to recall the pickup trucks because the agency argued the placement of the fuel tank made them more vulnerable to fires in certain crashes. Then-Transportation Secretary Frederico Pena overruled agency staff when he ordered the recall. The White House then, in effect, overruled him when it helped negotiate a settlement with GM.

Continue reading on USA Today.

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