Chrysler Corp. reached an unprecedented agreement Monday with federal safety regulators to replace the rear-door latches on 4.5 million minivans while maintaining there is no safety defect.
The agreement, which was criticized by safety advocates, is likely to end a major investigation of the 1984-94 minivans, Chrysler's most popular vehicles. It also signals a new willingness by regulators to settle complex safety disputes without recalls.
In 1993, the National Highway Traffic Safety Administration began a probe of lift-gate latch failures in Chrysler minivans during crashes. Federal records show that 28 people died after being thrown out the rear doors.
The agreement amounts to a voluntary "service action" rather than a more stringent recall. The deal emerged after about two weeks of negotiations between Chrysler and top NHTSA and Department of Transportation officials.
Avoiding an actual recall was important to Chrysler because it faces at least 18 product liability lawsuits and five class-action lawsuits related to the latch. A recall--which requires a finding of a defect--would presumably weaken the company's case in court.
"We are not taking this action because the latch is defective," Chrysler Vice President Arthur Liebler said. "We're doing this because the growing awareness surrounding this issue is causing concern among our owners."
This is the second recent case in which the government has settled major auto safety probes without a recall. In December, federal regulators dropped a recall of GM's 1973-87 C/K pickup trucks, despite a finding by Transportation Secretary Federico Pena that there was a defect. The government backed off the recall when GM agreed to spend $51 million on safety programs.
"This action will improve the safety of these vehicles at no cost to owners and alleviate the concerns that have been raised regarding the performance of the latches in crashes," NHTSA Administrator Ricardo Martinez said in a statement.
Consumer safety advocates, however, said the agreement is a sellout that will mean less protection for consumers and signals a dangerous trend in safety regulation.
"The agency has rolled over for Chrysler just as it did for General Motors with its sidesaddle-pickup decision," said Clarence Ditlow, president of the Center for Auto Safety in Washington.
The safety probe of Chrysler's vehicles came at an awkward time for the auto maker. It is preparing to begin selling its redesigned 1996 Dodge Caravan, Plymouth Voyager and Chrysler Town and Country minivans.
The company has steadfastly maintained that the vehicles under investigation are safe. Executives say federal accident records show the minivans are safer than most other vehicles and competitor's minivans.
The safety probe caused an internal debate within Chrysler. Some executives argued that the company should fight the regulators because a safety problem did not exist; others said the investigation was hurting the company's reputation and a way must be found to settle the dispute.
"It certainly hasn't helped the image of the company," said Liebler, who directs the company's marketing and public relations efforts.
Company and government officials said the settlement contains most of the requirements of a recall except that of requiring Chrysler to publicly acknowledge that a safety defect exists.
The accord requires Chrysler to notify all minivan owners that the company will replace free of charge the rear latch with a stronger device--one now used in the 1995 models, which are not covered by the service action.
The auto maker said it will go to unusual lengths to make certain that owners are made aware of the offer. It plans to send letters to all owners and to launch a nationwide print and TV advertising campaign. It said it will send out follow-up letters if the response is not strong.
Chrysler said the letters will go out within two weeks and that repairs could begin within a month. However, it could take up to a year to fix all the vans because of a shortage of new latches.
The company would not estimate how much the repairs and advertising campaign will cost. But executives said replacing the latch will cost about $90 and take an hour. So if all the vehicles are returned, the cost could approach $400 million. In a typical service action, about 50% of vehicles are returned for repair; in a recall, about 80%.
Ralph Hoar, an attorney and consultant who has been pushing the government for a recall, said anything short of that is inadequate because many owners will ignore the problem.
But Stephen Oesch, general counsel for the Insurance Institute for Highway Safety, said the settlement appears to be a sound one that provides most of the elements of a recall: notification, a free remedy and a quick solution.
The settlement is being interpreted as further evidence that NHTSA and the Department of Transportation, agencies under cost-cutting pressure by the Republican-controlled Congress, want to find reasonable solutions to complex safety issues.