Facing an unprecedented level of government crackdowns on life-threatening lapses in safety, U.S. car manufacturers recalled nearly 35 million vehicles in the first seven months of the year--more vehicles in the country through the end of July than almost any other similar timeframe (the lone exception: 2014). According to data from the U.S. National Highway Traffic Safety Administration, this year's recalls involved problems ranging from cybersecurity gaps making cars vulnerable to hackers, rupture-prone air bags and possible fire hazards linked to ventilation systems.
The number of vehicles recalled in that time frame surpasses any total logged by federal regulators in nearly five decades except for last year, when auto makers recalled 49 million vehicles in seven months, on its way to a record annual total. The agency tracks recalls back to 1966.
The swift pace of the recalls comes amid increased pressure from regulators, who are ramping up oversight after widespread criticism from lawmakers and others for failing to spot safety problems. Auto makers, in turn, are conducting more recalls than ever before and agreeing to unprecedented government audits.
Another unprecedented factor: Nearly a dozen car makers in the U.S. this year are recalling roughly 14 million vehicles equipped with rupture-prone air bags made by Takata Corp. of Japan, according to a NHTSA spokesman. That is part of a broader recall of some 32 million vehicles, the largest in U.S. history.
"Life as we know it is going to change," Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne said in July before a sweeping settlement with regulators that hit the auto maker with a record $105 million penalty for mishandling recalls. "This new order requires a significant shift in how we are managed."
The shifting landscape represents a turnabout from years of comparatively lax interactions between regulators and car makers. A government audit earlier this year found regulators too often relied on auto makers to report safety defects and other possible problems, culminating in a failure to spot faulty ignition switches manufactured by General Motors Corporation, which have now been linked to the deaths of more than 120 people.
Regulators "have taken actions that convey a sense of toughness we haven't seen before," said John Bozzella, a former Chrysler executive who now advocates on behalf of car companies in Washington, on the sidelines of an automotive conference here in northern Michigan.
Fiat Chrysler is among those bearing the brunt of regulators' renewed urgency. The car maker last month agreed to myriad penalties for lapses spanning nearly two dozen recalls affecting more than 11 million vehicles, including older Jeeps with rear gas tanks linked to dozens of fatal fires.
The Italian-U. S. company suffered maximum $35 million penalties each for three broad safety lapses: misleading and obstructing regulators; inadequate and lagging repairs; and failing to alert vehicle owners to recalls in a timely manner.
Regulators could soon be more empowered. The U.S. Senate last week approved raising maximum penalties to $105 million, though below the $300 million cap Obama administration officials wanted.
Fiat Chrysler recalled more than 9.6 million vehicles through the end of July, more than any other auto maker and 28% of the industrywide total. Honda Motor Co. of Japan recalled roughly 8 million, largely due to expanded recalls involving rupture-prone air bags made by Takata. About 34 million vehicles with defective Takata air bags were recalled, making it among the largest recalls for a consumer product in U.S. history.
Fiat Chrysler in a statement said safety is of paramount importance and that the auto maker is implementing new measures to improve recall execution while sharing best practices with others. A Honda spokesman said the company remains focused on repairing recalled vehicles and vigorously addressing customers' needs and concerns.
Despite the safety campaigns, Fiat Chrysler and other auto makers are booking profits and logging big monthly sales gains as consumers flock to dealerships to buy high-margin trucks and sport-utility vehicles amid low gasoline prices. Traffic deaths over the years have fallen with the advent of better safety features.
Still, unprecedented recalls are hitting car makers' financial books. Fiat Chrysler's U.S. arm took a $90 million charge in the second quarter for the settlement with regulators. The $105 million total possible penalty roughly equals the company's first-quarter profit. But the penalties aren't all immediately payable-$15 million is deferred unless the company misbehaves-and the auto maker doesn't expect a significant financial impact from the settlement.
GM in the 18 months ending in June took more than $3 billion in charges for recalls in part to address millions of vehicles with defective ignition switches that can slip out of the run position and disable safety features including air bags.
The Detroit auto maker expects to separately pay up to $625 million for a fund compensating ignition-switch victims. GM recalled more than 2 million vehicles through the end of July after recalling a record more than 26 million in all of 2014.
Fiat Chrysler's regulatory settlement requires vehicle repurchases in some instances and assigns an independent monitor to audit internal recall processes for up to four years, a penalty rarely assessed.
Mark Rosekind, the NHTSA chief who took over in December, likened the independent monitor condition to one imposed in 2014 by the Justice Department on Toyota Motor Corp. of Japan in a criminal case over sudden-acceleration issues. Toyota agreed to pay a $1.2 billion penalty in that case.
Regulators haven't referred Fiat Chrysler's lapses to the Justice Department. GM and Takata face Justice Department probes over their handling of deadly problems with defective ignition switches and air bags, respectively. The companies have said they are cooperating with the investigations.
Still, Fiat Chrysler's financial penalty tops the $70 million regulators assessed Honda late last year for lapses reporting possible safety problems and the $35 million GM paid in 2014 for failing to alert the government to faulty ignition switches in a timely manner.
Regulators separately in July pressured Fiat Chrysler to recall 1.4 million vehicles with possible cybersecurity flaws after hackers demonstrated an ability to commandeer controls of a moving Jeep from a laptop miles away.
Fiat Chrysler isn't the only company in regulators' cross hairs. Takata in May acknowledged to regulators defects in some air-bag inflaters that can rupture, a problem linked to eight deaths and more than 100 injuries. Takata signed a consent order pledging to cooperate with regulators overseeing the air-bag issues.
GM, meanwhile, felt regulatory heat again in June. GM recalled more than 160,000 older Hummer SUVs in the U.S. with model years ranging from 2006 to 2010 for possible fire hazards after regulators threatened to open a formal investigation, said a person familiar with the matter.
GM no longer makes Hummers, having jettisoned the brand as part of the company's 2009 government-brokered bankruptcy restructuring.
Federal regulators in May exercised an option to continue increased oversight of GM as part of a settlement over the auto maker's lapses with faulty ignition switches. The auto maker must file additional reports and hold monthly meetings with regulators for at least another year.