Judge Orders Fiat Chrysler To Face Lawsuits Over How It Handled Recalls

Illustration for article titled Judge Orders Fiat Chrysler To Face Lawsuits Over How It Handled Recalls
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Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Safety Dance

You might remember about a year ago when Fiat Chrysler was getting dinged by federal regulators over how recalls were handled for some 11 million cars. Those problems included notifying owners, making sure the right parts were in stock, and actually fixing the cars once they were recalled. Fiat Chrysler paid $175 million in fines.


That problem has not gone away for the automaker. Now, a federal judge in New York has ruled that it must now face a lawsuit from shareholders over these failures. Via Reuters:

U.S. District Judge Jesse Furman in Manhattan said the automaker must face claims over statements in late 2014 that it was “substantially” in compliance, even as it was being probed by the National Highway Traffic and Safety Administration for shortcomings tied to two recalls.

Furman dismissed claims accusing Fiat Chrysler of violating accounting principles by failing to set aside enough money to cover recalls it had reason to expect.

The judge also allowed shareholders to pursue claims over the compliance disclosures against CEO Sergio Marchionne and the former safety chief of the automaker’s FCA U.S. unit, Scott Kunselman.

Fiat Chrysler did not immediately respond to requests for comment on behalf of the defendants. Lawyers for the shareholders did not immediately respond to similar requests.

2nd Gear: Nissan’s Setbacks On The Path To Growth

Renault-Nissan CEO Carlos Ghosn swore in 2014 that he can make his alliance among the top three automakers in the world, head of Toyota, General Motors and Volkswagen. So far that’s had a few setbacks, including potentially Brexit, but also at least one boost in the form of the Mitsubishi purchase. Can Ghosn pull it off? Via Automotive News:

The question is whether the alliance, and Ghosn as its dual CEO, might be stretching itself too thin. While Nissan is on course to purchase a third of money-losing Mitsubishi, the alliance, which spent over 2 billion euros to take control of AvtoVAZ, needs to participate in an 85 billion ruble (1.16 billion euro) recapitalization of the struggling Russian automaker.

Although the alliance says synergies between Renault and Nissan totaled 4.3 billion euros last year — a figure that is not independently verifiable — analysts feel progress among legacy brands has been slow. Dominic O’Brien of Exane BNP Paribas sees the shares fully valued at their current level of about 70 euros and acknowledged that financial markets are growing increasingly impatient with a man once considered to be the world’s most talented car executive. “The progress of the alliance certainly frustrates the investors we speak to in the market at least,” O’Brien said.

Market watchers says that the alliance’s competitiveness would be strengthened if more parts were shared between Renault and Nissan, yet here too progress is slow. Ghosn has run Renault for more than a decade and Nissan for more than 16 years, but the partners only began to forge plans to consolidate architectures three years ago. As a result, it will take until 2020 before 70 percent of the combined volume is built off common platforms.


Good piece, worth a read in full.

3rd Gear: Google Is The Self-Driving Veteran Now

Wired has a story on a big milestone at Google: the tech giant’s self-driving cars just hit two million miles of autonomous driving on public roads, which puts them way ahead of rivals like Uber and even the automakers.

There’s nothing inherently significant about the number, but it’s a reminder Google remains the veteran player in a field full of rookies. In those two million miles, a robo-carcaused just one minor crash. The technology experienced a glitch that required human intervention just 341 timesduring one 423,000-mile stretch. That’s not quite as foolproof as carbon-based lifeforms, who tend to crash once every 238,000 miles, but it’s not bad.

That experience matters, because Google is working on the hard stuff now. “It’s fairly easy nowadays to get the first 90 percent of the problem,” says Dolgov, the program’s head of engineering. That last 10 percent requires teaching the car to handle edge cases, from that couple riding unicycles to the woman in an electric wheelchair chasing a duck with a broom. (No, really. Those two things actually happened.)


Great. Now they just have to find a way to market and sell that technology, somehow.

4th Gear: Dealers Warn Of Higher Prices With Direct Sales

As Tesla’s fight to sell direct in Michigan continues, the chairman of the National Automobile Dealers Association warns of higher prices for customers. Via The Detroit Free Press:

NADA Chairman Jeff Carlson, whose association represents nearly 16,500 new car and truck dealerships, said that automotive retailing is different from other types of retail because the transaction often involves bank financing and the purchase of a used car that the customer is trading in.

Carlson says competition between dealers leads to lower prices. The competition leads to a price reduction of up to $700, according to a study NADA commissioned from the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

“Every state has to look to their consumer and decide what’s best for them,” Carlson said today in Detroit at an event hosted by the Automotive Press Association. “Either they can continue to support the franchised dealers’ discount of up to $700 ... or, the choice for the policy makers is they can offer the consumer a vertically integrated model that prices vehicles at retail.”


5th Gear: Deaths Up

Deaths are up on the roads, thanks to more driving and more texting while driving. And probably other things. Via the Freep:

The number of traffic deaths jumped by 10.4% to 17,775 in the first six months of this year, according to a preliminary estimate by the government’s highway safety agency, and at least one of the culprits is likely the rising instance of texting while driving.

The National Highway Traffic Safety Administration, which compiled the report, said the second quarter of 2016 was the seventh consecutive quarter that fatalities rose compared to the same quarter the previous year. The agency did not cite specific causes other than a 3.3% increase in number of miles driven, but data compiled by the National Safety Council shows texting while driving is a factor.

The percentage of drivers texting or manipulating handheld devices increased from 0.9% in 2010 to 2.2% in 2014. For drivers between ages 16 and 24, that rate jumps to 4.8% and young women are more likely to text than their male counterparts, NSC research shows.

“We don’t know all the causality behind the increase yet, but you can add in factors like distraction even though 46 states have laws prohibiting texting while driving,” said Deborah Hersman, CEO of the National Safety Council.


Reverse: Natchez Trace Parkway


Neutral: How Does Nissan Beat The Big Players?

Besides the obvious stuff we enthusiasts (screaming minority that we are) want, like fewer CVTs and more fun cars. Everything Nissan does these days seems to be to chase volume. Why doesn’t it seem to be working?

Editor-in-Chief at Jalopnik. 2002 Toyota 4Runner.

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LOL okay dude.

NADA Chairman Jeff Carlson ... says competition between dealers leads to lower prices. The competition leads to a price reduction of up to $700, according to a study NADA commissioned from the Phoenix Center for Advanced Legal and Economic Public Policy Studies.