First time an automaker has said no to a recall in 17 years, the last time being Chrysler as well.

Chrysler’s refusal to recall 2.7 million 1993-2004 Jeep Grand Cherokees and 2002-2007 Jeep Libertys may be a decision based on economics. However, the big ‘no’ from Sergio Machionne may end up costing the automaker more than just money, also taking a massive bite out of Chrysler’s increasing post-bankruptcy reputation.

According to Automotive News, if the automaker were to comply with the recall, it could cost an estimated $500 million. With the automaker taking a stance of defiance, they could still be forced to perform work on identified units and have to pay for lawyers at the end of the day, bringing the cost up even more.

Of contention is the risk of fire after a rear-end collision. Models affected have their fuel tanks mounted behind the rear axle and positioned in such a way the NHTSA believes causes an increased risk to occupants. Chrysler doesn’t agree and contends both models met or exceeded safety standards at the time they were built.

Regardless of the actual data, it may all come down to who has the better lawyers at the end of the day.

From the NHTSA’s point of view, the following looks likely to happen:

1. Chrysler has until June 18 to reply formally to NHTSA’s request.
2. If Chrysler stands its ground, NHTSA may release a defect finding.
3. The agency then must hold a public hearing to gather comments.
4. After making a final determination, NHTSA may order a recall.
5. An automaker may file a lawsuit to challenge that order.
6. NHTSA also may sue to compel a recall.

Automotive News notes this is the first time in 17 years an automaker has declined the NHTSA’s request for a recall. The last time it happened Chrysler was also at the opposite end of the table with the NHTSA. The affected models – 1995 Dodge Stratus and Chrysler Cirrus – were requested for recall due to faulty seat belt anchors. The recall was never performed. Instead the issue went through the courts and the US federal appeals court ruled in favour of Chrysler.

[Source: Automotive News]

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