Tag Archive | "investigation"

U.S. Opens Investigation of Possible Illegal Activity in Dealer Cuts


WASHINGTON – The federal inspectors that criticized the Obama administration, General Motors and Chrysler for their handling of about 2,300 U.S. dealership terminations have opened a follow-up investigation of possibly illegal activity in the effort.

The Office of the Special Inspector General for the Troubled Asset Relief Program, whose $700 billion bailout included GM and Chrysler, won’t disclose the targets of the investigation or the actions being probed, said Kris Belisle, the office’s spokeswoman.

But auditor files used in preparing a July report on dealer terminations during the automakers’ bankruptcies have been turned over to the office’s investigators, she said in an e-mail.

“There is an investigation,” Belisle told Automotive News today. “Generically, we can investigate any offense.”

The July audit more generally examined the role of the administration’s auto task force in the dealer cuts and the processes used by GM and Chrysler to decide which dealers to terminate.

Cost savings?

It also looked at the extent to which dealer cuts would save money for the automakers.

An investigation bores in on possibly illegal activity, and it can lead ultimately to prosecutions and even penalties such as fines or imprisonment.

The inspector’s office, headed by former federal prosecutor Neil Barofsky, had 104 ongoing criminal and civil investigations as of June 30, according to its most recent quarterly report to Congress.

The focus of those investigations has included false statements, obstruction of justice, public corruption and various kinds of fraud, the report said.

Office investigators can issue subpoenas, make arrests and refer cases to the U.S. Justice Department for prosecution, according to the report.

U.S. Treasury Department spokesman Mark Paustenbach declined today to say whether the agency had been contacted by investigators. GM spokesman Greg Martin also declined to comment.

Chrysler has not been contacted by investigators, said company spokesman Michael Palese.

“Chrysler Group’s optimized dealer network is already contributing to improved vehicle sales and will be a vital part of the company’s success as we continue to deliver outstanding products to our customers,” he said.

The 41-page July audit did not suggest that any illegal activity had been committed.

Questions and criticism

However, auditors criticized the administration for accelerating dealership closings last year during a severe economic downturn and for failing to consider the impact of the cuts on automakers’ viability and costs.

Chrysler, in the end, terminated about 760 dealerships after a series of federally-mandated arbitration cases took place this summer. GM cut another 1,550 dealerships.

The auditors also expressed doubt about the credibility of GM’s and Chrysler’s estimates of savings from the dealer cuts, and they faulted GM for keeping inadequate records of its decision-making on terminations.

Dealer advocates have questioned whether evasive responses to auditors’ questions delayed release of the critical report until July 18 — four days after dealer arbitration hearings were completed.

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U.S. Opens Rust Probe of 1997-2001 F-150 Pickups


DETROIT – U.S. safety regulators have opened a preliminary investigation into reports that fuel tanks from 1997 to 2001 model year Ford Motor Co. F-150 pickups have dropped onto the road due to rusted support straps, Reuters reported.

“This presents a fire hazard from leaking gasoline as well as an obstruction hazard to vehicles following the subject trucks,” the U.S. National Highway Traffic Safety Administration said in a notice posted on its Web site.

Ford is cooperating with the government as it investigates the reports, spokesman Wes Sherwood said on Monday.

Investigators received 32 reports of corrosion, including 28 where one or both straps supporting the fuel tank had broken, causing it to drag on the ground or detach from the truck, NHTSA said.

There were six reports of fuel spills among the complaints, but no fires or injuries, NHTSA said. The investigation covers about 1.4 million pickup trucks and was opened on September 7.

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Hyundai Sonata Steering Probed by U.S. Regulators


DETROIT – U.S. safety regulators have opened a preliminary investigation into claims Hyundai Motor Co.’s best-selling car in America, the 2011 Sonata sedan, may have steering problems, reported Reuters.

There have been no injuries or accidents reported to the National Highway Traffic Safety Administration or Hyundai regarding the steering issue, government and company officials said.

NHTSA said steering could be a problem on 16,300 Sonata sedans, which were built in the same month at Hyundai’s plant in Alabama. NHTSA said Sonatas cited in its reports each had fewer than 600 miles driven on them.

NHTSA said it will investigate to verify consumer complaints that, “the steering shaft allegedly decoupled from the hand wheel resulting in a complete loss of steering capability.”

NHTSA opened the investigation for the Sonatas last Friday, a day after it opened a preliminary investigation into an estimated 37,889 model year 2009 Volkswagen Jetta TDIs that may have engine stalling problems. NHTSA said it received seven complaints on the engine problems.

On Aug. 23, after receiving 217 consumer complaints, NHTSA opened a probe regarding possible fuel spills during refueling on as many as 223,000 Chrysler Jeep Wranglers from model years 2007 and 2008.

No crashes or injuries have been reported to NHTSA regarding the Wrangler or the Jetta issues.

Hyundai spokesman Jim Trainor said two Sonata customers brought their sedans to Hyundai dealerships complaining of steering problems. Those cars were fixed and returned to the owners.

The Sonata is a key to Hyundai’s success in the U.S. market, and the South Korean automaker is advertising it as an alternative to the more expensive Japanese sedans of similar size.

Through July, Sonata sedans accounted for 46 percent of Hyundai’s car segment sales this year.

The Sonatas for the U.S. and Canadian markets are built at a Hyundai plant in Alabama. Sonatas sold outside those markets are built in South Korea.

Last month, a similar preliminary investigation was opened by NHTSA for the Kia Soul after a driver complained of a total loss of steering and limited braking in a car that was two months old and had about 4,300 miles driven on it.

Hyundai’s Trainor said the Soul and the Sonata issues are unrelated and it has not been determined if steering issues on either model are related to supplier parts.

Hyundai’s sister company, Kia, builds the Soul in South Korea.

The Soul is the rival to the Toyota Motor Corp. Scion brand targeted at younger drivers.

Hyundai’s total U.S. sales are up 24 percent from last year through July, and U.S. sales for the Sonata were up 45 percent to 107,085, according to the Automotive News data center. Industrywide sales rose 15 percent during the seven-month period compared with the same period last year.

In 2009, while the overall U.S. auto industry suffered a 21 percent drop in sales, Hyundai, its sister Kia, and Subaru were the only major auto brands to increase sales.

Kia’s share of the U.S. market so far this year is 3.1 percent.

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Jeep Grand Cherokee Under U.S. Probe for Possible Fuel Tank Defects


WASHINGTON – Federal regulators have opened an investigation into 3 million Jeep Grand Cherokees to determine whether more than a dozen post-crash fires and deaths are connected to the placement of the SUV’s fuel tank, reported Automotive News.

The National Highway Traffic Safety Administration said today its preliminary examination of 1993-2004 Jeep models found 13 deaths in 10 crashes “most likely associated with the alleged defect.”

The nonprofit Center for Auto Safety alleges the Grand Cherokee features a fuel tank that extends below the rear bumper, behind the rear axle, and lacks adequate protection in crashes and rollovers. The tank’s fuel filler neck also tears off in crashes, the group contends in a petition to the federal agency.

NHTSA also found complaints from vehicle owners alleging nine injuries and one death stemming from post-crash fuel tank leaks or fires, the agency said on its Web site.

Chrysler Group said it is cooperating with the investigation.

“It is important to note that this is an investigation, not a recall,” Chrysler spokesman Michael Palese said. “Indeed, the 1993-2004 Jeep Grand Cherokee meets or exceeds all applicable federal safety standards and has an excellent safety record.”

The company said in a statement last November that it “is confident that a study which considered all factors in all collisions — including rear collisions with fire — would show that the 1993-2004 Jeep Grand Cherokees perform as well as or better than other vehicles in their class.”

Chrysler still stands by that statement, Palese said today.

But Clarence Ditlow, head of the Center for Auto Safety, called on Chrysler to recall all 1993-2004 Jeep Grand Cherokees.

“More people have burned to death in fatal fire crashes than in the infamous Ford Pinto,” he said in a prepared statement.

NHTSA said consumer complaints of post-crash fires do not by themselves “establish a defect trend.”

In addition, NHTSA’s preliminary review of early warning reporting data on the Jeep Grand Cherokees “did not find the subject vehicles to be over-represented for post-crash fires.”

In one case that led to a settlement with DaimlerChrysler, Chrysler’s former owner, Kenneth Smith of Jacksonville, Fla., was driving his 1995 Jeep Grand Cherokee through an intersection when it was rear-ended by a Lincoln Town Car going 20-25 miles an hour, according to a statement by Smith’s attorney.

“Immediately upon impact, the Jeep burst into flames,” the 2002 statement said. Smith “suffered burns to his abdomen, right hand and arm. He has undergone two skin grafts, and must wear special garments to protect his arm and hand,” the lawyer said.

The Center for Auto Safety, which was founded by Ralph Nader, filed a petition in October 2009 that cited NHTSA’s own files that show the vehicles at issue were involved in 172 fire crashes leading to 254 deaths from 1992 to 2008.

The 1993-2004 Jeep Grand Cherokee has a fatal-crash-with-fire rate that is quadruple that of SUVs made by other companies, the petition contends.

When DaimlerChrysler owned the Jeep brand, it moved the Grand Cherokee’s fuel tank beginning with 2005 models and shielded it, the petition said. Since that change, only one crash resulting in a fatal fire has occurred.

The petition cited a couple of lawsuits in which many details are not available because of confidential settlements

In one case, a stopped 1997 Grand Cherokee was struck from behind in Long Island, N.Y., by a braking Toyota MR2.

The driver of the MR2, a gardener, was fatally burned when he was enveloped by burning fuel from the ruptured tank of the Grand Cherokee, the petition alleged.

Two sisters in the back seat of the Grand Cherokee were severely burned when they could not get out because the doors jammed, according to the petition.

The crash shows “the unique hazards of an unshielded tank extending below the rear bumper,” the petition said.

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NHTSA Upgrades Probe of 1.2M Toyota Corollas, Matrixes


WASHINGTON – Federal regulators have upgraded an investigation of as many as 1.2 million Toyota Corollas for possible engine stalling, Automotive News reported.

Consumers have filed 1,101 complaints about Corollas and Corolla Matrixes for 2005-07 models, the National Highway Traffic Safety Administration said in a filing on its website.

“The engine can stall at any speed without warning and not restart,” NHTSA said in describing the problem.

Last November, the agency opened its investigation with a so-called “preliminary evaluation.” After Toyota responded with additional information, NHTSA upgraded the probe Aug. 18 to an “engineering analysis,” according to documents posted on the agency’s Web site.

An engineering analysis can lead to a recall. Since November, Toyota has recalled 11.2 million vehicles worldwide, most for problems with sudden acceleration.

Toyota spokesman Brian Lyons declined to say today whether the automaker is considering a recall of the vehicles under investigation.

“We are cooperating with the investigation,” he said in a phone interview. “Only North American vehicles are involved.”

In a March 2 letter to NHTSA, Toyota official Chris Santucci in Washington said, “Toyota does not believe that the alleged defect creates an unreasonable risk to motor vehicle safety.”

Lyons declined to say today whether the automaker still stands by that statement.

Toyota reported it approved 4,211 warranty claims for replacement of the electronic control unit or module, the computer that controls the engine. Six crashes have been reported, with no injuries or deaths.

In a January complaint, the driver reported a problem with a 2007 Corolla that had been driven 22,000 miles.

“When I got off work, I could not start the engine,” the driver wrote. “I tried three times and engine was finally started.”

The next morning, the driver brought the vehicle to the dealership.

The dealer replaced the electronic control module, solving the problem.

Toyota said it received the first field report about the problem in November 2005 and began an investigation in March 2006. It made an improvement to the control module in June 2007 and issued four technical service bulletins to dealers.

In March, the automaker attributed the problem to two possible causes: cracks in the soldered joints of the control unit’s circuit boards, and cracks in the glass coating of the varistor – a type of resistor used to protect circuits against excessive voltage by conducting increased current.

“Toyota has discovered that the supplier of the varistor changed the material and the production process, which made such cracks more likely,” the automaker wrote in its March report to NHTSA.

The New York Times and Consumer Reports said the agency has received similar complaints with the Pontiac Vibe – a near mechanical twin of the Matrix.

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U.S. Study Points to Driver Error in Many Toyota Crashes


Five months into an investigation of safety issues involving Toyota Motor Corp. vehicles, U.S. safety officials have yet to identify any new defects beyond those reported by the carmaker itself, reported The Wall Street Journal.

And in more than half of the crashes blamed on sudden acceleration analyzed by the government, data from the vehicles’ “black boxes” show the driver was not stepping on the brake at the time of the accident—indicating that driver error may have been at fault.

Those were the findings that U.S. Transportation Department officials disclosed Tuesday to members of Congress, offering the first significant details of the government’s ongoing investigation into Toyota’s recall of more than 8.5 million vehicles globally since last fall.

Officials stressed that their investigation continues and may take months to complete. But the data, at least for now, support Toyota’s assertion that electronic defects in its cars aren’t behind the incidents.

Experts at the National Highway Traffic Safety Administration examined 58 vehicles involved in sudden-acceleration reports and found data in 35 of them showed the brakes weren’t applied at the time of the crash. Data from nine other vehicles showed the brakes were used only in the last moment before impact.

The report doesn’t specify driver error as a cause of unintended acceleration, although people familiar with the investigation have said the findings point to pedal misapplication—mistakenly hitting the gas instead of the brakes—as a likely cause.

The release of the preliminary findings comes after calls from Congress to make public the results of NHTSA’s investigation into complaints about sudden acceleration in Toyotas. The Wall Street Journal reported in July that NHTSA had found evidence of driver error in most of the Toyotas it examined in its probe.

Toyota has identified floor mats that can entrap a car’s gas pedal as one cause of sudden acceleration. Another problem Toyota identified is a gas pedal mechanism that sometimes can be slow to return to its non-depressed position. Toyota has recalled more than eight million vehicles world-wide to correct those issues.

In five of the 58 vehicles NHTSA examined, the data recorders didn’t record the conditions in the car at the time of the crash. Black boxes from five additional vehicles showed the brakes were applied early in the incident or in the middle of the event. In one case both the brake and accelerator pedals were depressed. Investigators found one case of sustained braking and concluded the floor mat likely trapped the gas pedal.

NHTSA is still examining the data in one case, and in another it found that the information recorded was unrelated to an incident of sudden acceleration.

“The limited research completed so far has not led to identification of safety defects other than sticking gas pedals or pedal entrapment,” the report said.

Toyota said its own investigation has found no evidence that glitches in the electronic components of gas pedals could cause sudden acceleration, as some auto safety advocates have suggested.

Rep. Bart Stupak (D., Mich.), chairman of the Energy and Commerce Committee’s oversight panel, which held hearings on the Toyota recalls this year, said the report resolved few questions about the sources of the Toyota crashes.

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