Chrysler Relents, Agrees To Recall 2.7 Million Jeeps

Posted at 2:59 PM, Jun 18, 2013
and last updated 2013-06-18 14:59:59-04

2004_Jeep_Grand_CherokeeNEW YORK (CNNMoney) Chrysler stated last week that it will not comply with the recall demand, arguing that the vehicles are safe. It continued to claim Tuesday that the vehicles — 1993 to 2004 Jeep Grand Cherokees and 2002 to 2007 Jeep Libertys — are safe.

Its statement said it will recall the vehicles for inspection and, in “some cases,” will “provide an upgrade to the rear structure of the vehicle to better manage crash forces in low-speed impacts.”

“Chrysler Group recognizes that this matter has raised concerns for its customers and wants to take further steps, in coordination with NHTSA, to provide additional measures to supplement the safety of its vehicles,” the company said.

The National Highway Traffic Safety Administration, which had asked for the recall, did not have an immediate comment on Chrysler’s announcement.

If it had not agreed to act by the end of Tuesday, it faced the prospect of high-profile public hearings. There would have been testimony from both car safety advocates who have pushed for the recall, as well as the parents of children who burned to death in fires. Experts say the hearing would have caused Chrysler’s reputation to take a hit, even if it had avoided the recall.

“It strikes me that Chrysler underestimated the negative publicity they’d get out of fighting, and that they decided it was better off to go ahead and do the recall,” said Michelle Krebs, senior analyst at She said fighting the recall would have been “a very risky gamble,” even if Chrysler had eventually been proven right.

“It’s still an uphill battle for Chrysler in the perception of quality and [a hearing] could [have] set it back.”

The J.D. Power & Associates survey of car owners found that the number of problems reported by Jeep owners has fallen by about a third between 2008 and 2012. It has moved up in approval rankings from dead last out of 36 brands in 2008 to 23rd out of 34 last year.

An online survey by Kelley Blue Book last week found 64% of those answering the survey would not consider any vehicle from an automaker who fights a recall.

Related: How valid are car brand rankings?

However, a week of used car auctions tracked by Kelley shows no measurable change in average pricing or sales volumes of the affected vehicles. Used car site also reported no change in interest in the affected vehicles by potential car buyers visiting its site.

Chrysler still faces liability risks in numerous wrongful death suits. NHTSA says there have been least 37 accidents that caused fires and resulted in at least 51 deaths.

Krebs said she was surprised by the reversal by Chrysler, saying it appeared that Chrysler CEO Sergio Marchionne and other executives at the automaker had dug in and prepared for a fight.

Related: GM recalling 194,000 SUVs