Toyota Recalls Hybrids, as Chrysler Defies NHTSA

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By Douglas A. McIntyre Published
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Chrysler has made a decision it will regret, and regret substantially. It has opted to resist a call from the National Highway Traffic Safety Administration (NHTSA) to recall 2.7 million Jeeps. The government considers the collisions of some of these Jeeps to be a danger. Chrysler’s stance came just a day before Toyota Motor Corp. (NYSE: TM) agreed to a recall of 242,000 of its Prius and Lexus hybrid cars because of problems with their brakes. Toyota has learned the hard way that to admit mistakes about the mechanical problems with cars is a path of wisdom.

The record 2009 Toyota recall reached more than 9 million cars and included many Camry and Corolla vehicles — among the Japanese firm’s best sellers. It was done because of acceleration problems and involved cooperation of the NHTSA for those vehicles recalled in the United States. Toyota’s image was hurt badly by the size of the problem, but the company eventually was able to say that, despite the bad publicity and the cost, it had put the interest of its customers above most of its own.

Chrysler has made the decision to reject the government’s case about the Jeep completely. It announced:

NHTSA (National Highway Traffic Safety Administration) has issued a recall request letter proposing that Chrysler Group recall the Jeep Grand Cherokee in model years 1993 to 2004 and the Jeep Liberty in model years 2002 to 2007 (a total of approximately 2.7 million vehicles).

Chrysler Group has been working and sharing data with the Agency on this issue since September 2010. The company does not agree with NHTSA’s conclusions and does not intend to recall the vehicles cited in the investigation. The subject vehicles are safe and are not defective.

We believe NHTSA’s initial conclusions are based on an incomplete analysis of the underlying data, and we are committed to continue working with the Agency to resolve this disagreement.

USA Today described the decision as shocking, due largely to the scope of the potential danger:

Government data show 44 deaths in 32 rear-end crashes and fires involving the Grand Cherokees that it wants recalled, and seven deaths in five Liberty rear-impact/fire crashes.

Under the circumstances, what does it take to ruin Jeep’s image, increase public worry about the car’s safety and bring down a mass of lawsuits? Just one fatal crash, and no more — one that involves the issue that Chrysler claims does not rise to the level of a recall.

Chrysler Group likely will do itself unimaginable injury, and that injury will come on a single road, in a single crash and in the blink of an eye.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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