Chrysler may have inspired a new negotiating tactic for automakers who receive government requests for a recall. They may just say no and see how much authorities will compromise, USA Today reports.
The National Highway Traffic Safety Administration (NHTSA) requested that Chrysler recall 2.7 million vehicles, citing risks of fuel tank fires. 51 people have reportedly died in the types of incidents NHTSA is concerned about.
Chrysler refused to recall the vehicles, disagreed with the government's evidence and even publicized a white paper refuting the government's claims. It maintained this position for weeks, but now, the automaker has given in.
CNN Money said Chrysler's change of heart came just hours before the government's deadline.
If Chrysler stood its ground with the refusal, CNN Money says the company may have been subjected to high-profile hearings, and the testimony from car safety advocates and victims' families, could have hurt the automaker's reputation.
Even if Chrysler won it could have witnessed adverse effects on its sales. A Kelley Blue Book survey conducted last week found 64 percent of the respondents claimed they would not consider buying a vehicle from an automaker who fights a recall.
But the recall Chrysler has now agreed to is not exactly what the government originally asked for. Instead of installing a steel plate over the gas tanks in the 2.7 million at-risk vehicles, the automaker will be working on estimated 1.6 million vehicles, conducting inspections and adding factory trailer hitches where needed.
"Chrysler wins with a better, less-expensive deal" as a result of its initial refusal, Michelle Krebs, an auto industry analyst for Edmunds.com, told USA Today. The company also does not have to refer to any of the affected vehicles as defective, she added.
Some are expecting other automakers to make note of Chrysler's semi-victory and employ similar tactics.
“We could see additional automaker push back when NHTSA requests a sweeping recall, because it now looks as though NHTSA is willing to negotiate," Alec Gutierrez, analyst at Kelley Blue Book's told USA Today.
Clarence Ditlow, head of the Center for Auto Safety, told USA Today other car companies will “absolutely” dig in their heels, hoping for leverage against safety agency recalls.
© 2023 Newsmax Finance. All rights reserved.