Chrysler Group might have kicked off a new negotiating tactic for car companies dealing with recall requests from the government.
Just say "no" and see how much the National Highway Traffic Safety Administration will dial back its request to get a recall without going to court.
"Sure, absolutely" other car companies now will dig in their heels, hoping for leverage against the safety agency in recall discussions, says Clarence Ditlow, head of the Center for Auto Safety.
Almost universally in dealings with NHTSA, all a car company says is, "We are cooperating fully." Chrysler's very public refusal, plus posting of a "white paper" refuting the government's arguments, was a stunning slap in the face.
After refusing for two weeks, Chrysler said Tuesday it will recall 1.56 million 1993-98 Jeep Grand Cherokee and 2002-07 Liberty SUVs, significantly fewer than NHTSA's original request for a recall of 2.7 million Jeeps, including 1999-2004 Grand Cherokees.
"We could see additional automaker pushback when NHTSA requests a sweeping recall, because it now looks as though NHTSA is willing to negotiate," says Alec Gutierrez, analyst at Kelley Blue Book's kbb.com.
NHTSA says the Jeeps are too prone to fire deaths after rear-end collisions. Chrysler says data show otherwise. NHTSA on June 3 asked Chrysler for the recall. After the car company balked, NHTSA set a Tuesday deadline for Chrysler to change its mind, or officially refuse, creating a staredown.
Chrysler blinked, but in return for announcing a voluntary recall, the automaker got less-daunting terms.
"Chrysler ended up with a better deal - 1.6 million vehicles vs. 2.7 million," says Michelle Krebs, auto industry analyst at shopping site Edmunds.com. And noting the recall remedy - making sure the Jeeps have a Chrysler-made trailer hitch or suitable accessory hitch - she points out that many of the recalled vehicles will need no work. The hitch can help protect the fuel tank in low-speed rear impacts.
Under the deal, Chrysler says it also won't have to call any of the vehicles defective, which works in the company's favor if there are lawsuits.
"Chrysler wins with a better, less-expensive deal" as a result of its initial refusal, Krebs says.
But others say that most recalls are a negotiation and that the only thing new about the Chrysler vs. NHTSA standoff is that it was done in the open, instead of in back rooms.
"The difference in this negotiation is that it became public," says Jack Nerad, vice president and executive market analyst at kbb.com. "The truth is that many of the voluntary recalls are the subject of discussion and give-and-take between the manufacturer and NHTSA. Based on the amount of money at stake, it is not difficult to understand why car manufacturers" try to limit the number of vehicles and their repair costs, he says.
And the Jeep recall isn't a one-sided deal. "NHTSA saves face," Krebs says.
The few times car companies have refused a recall request, the agency has spent time, money and political capital on additional hearings and data collection, then perhaps a federal court case to force a recall, and has sometimes comes up empty-handed.
If automakers always said "no" at first, it could jam up the process, making NHTSA less effective at policing new auto safety problems. But it probably won't go that far.
"I do not expect the Chrysler situation to be the norm," says Larry Dominique, 30-year industry veteran and president of ALG, a unit of TrueCar.com that specializes in measuring and forecasting vehicle depreciation. "The number of recalls remains fairly consistent, which implies the (private negotiating) system between manufacturers and NHTSA works."
James R. Healey, USA TODAY