Chrysler wins cut from feds, recalls 1.56 million Jeeps

James R. Healey | USA TODAY

UPDATED 7:32 p.m. ET, June 20, to add detail about last-minute phone conversation that triggered the recall.

Chrysler Group agreed to a recall it has fought for two weeks, but only after the government slashed the number of Jeeps involved in the recall by more than a million, saving the automaker tens of millions of dollars.

The deal resulted from an unusual phone conversation Tuesday between Chrysler CEO Sergio Marchionne and David Strickland, administrator of the National Highway Traffic Safety Administration.

As a result of the discussion between the two chiefs, Chrysler said it will recall 1.56 million 1993-1998 Jeep Grand Cherokee and 2002-2007 Jeep Liberty SUVs.

Excluded: About 1.1 million 1999-2004 Grand Cherokees that were part of NHTSA's original recall request for 2.7 million vehicles. Chrysler on June 6 said the government was wrong in its analysis, and the automaker said it would refuse the request. NHTSA had Tuesday as a deadline for a formal response.

But after extensive discussions and an almost 11th-hour agreement, Chrysler said it will recall the smaller number of Jeeps.

The recall excludes 1999-2004 Grand Cherokees, which are of a different design than the earlier models, that NHTSA originally wanted included in the recall. On those vehicles,

Chrysler now says it will perform a "customer service action." They'll get nearly the same treatment as the recalled models, but Chrysler doesn't have to refer to those as a recall and such actions are subject to different requirements.

NHTSA says the Jeeps that are being recalled have been involved too often in deadly fires after rear crashes. Chrysler says that's wrong, that crash data show the Jeeps are among the safest of their type and era.

ABOUT-FACE: Chrysler was expected to refuse recall request

As part of the agreement with NHTSA, Chrysler not only doesn't have to recall as many — it doesn't have to say any of them are defective. That will help Chrysler defend itself in any lawsuits over those Jeeps.

And Chrysler only has to say the modifications it will make to some Jeeps are effective in "low-speed impacts."

The most publicized deaths have been in fires following rear-end crashes by vehicles crashing at highway speeds into Jeeps that were stopped or going slowly. Chrysler isn't being required to say that such incidents could not happen again.

The repairs done under both the recall and the "customer service action" come down to trailer hitches. Neither NHTSA nor Chrysler fully explained that Tuesday, but the assumption appears to be that the hefty structure of a trailer hitch fastened into the vehicle's rear frame helps absorb some force from a rear crash.

Thus:

• Recalled and "customer service" Jeeps with factory-installed hitch assemblies, or those from Chrysler's parts unit, Mopar, will be inspected by dealers and be pronounced OK without changes if the hitch is in good shape.

• The Jeeps in either group with non-Chrysler hitches will get Mopar replacement hitches installed free if the existing hitches have sharp edges or otherwise could damage the gas tank in a rear crash.

• Recalled Jeeps without hitches will get Mopar hitches installed free, but "customer service" Jeeps without hitches do not get them free.

NHTSA said it is "pleased that Chrysler has agreed to take action to protect its customers and the driving public" and said it "will continue our investigation into this issue, pending the agency's review of the documents provided by Chrysler in its recall action."

That's probably routine. The agency normally looks over and gives final approval to an automaker's recall documents, even after the recall's begun.

Chrysler's step should avoid prolonged bad publicity that would have resulted from an ongoing dispute with NHTSA.

Owners attempt to return JEEP vehicles JEEP owners attempt to return their vehicles on June 17th, the day before Chrysler decided to issue a recall for two models.

Had Chrysler formally refused on Tuesday, NHTSA could have convened public hearings on whether to force a recall. In those hearings, NHTSA staff would unreel the most damning information possible, accompanied by a parade of people who lost loved ones in Jeep fires, often accompanied by grim photos.

Chrysler could have prevailed — though with a big image black eye for some time. While such showdowns with NHTSA are rare, history shows automakers often win and don't wind up recalling the vehicles.

Also in Chrysler's favor was that the Grand Cherokees and some of the Liberties are beyond the federal 10-year limit for recalls. Chrysler could have been stubborn, invoked the 10-year rule, and refused to pay for any modifications to vehicles past the age limit, even if there were a recall.

So far, car shoppers appeared not to care about the recall standoff. Online shopping sites said the traffic on their sites for Jeeps in general and for the affected vehicles showed no dropoff. Kelley Blue Book's kbb.com says, "Shopper interest has been unaffected" by Chrysler's initial refusal to recall.

And there has been no "appreciable drop in vehicle values" during the standoff, kbb.com says.

That's largely because the Jeeps involved are so old. The recall "does not involve current model-year SUVs or even SUVs from the current style," says AutoTrader editor Brian Moody. "The current Jeep vehicles are so fundamentally different that it may not matter as much to the average car shopper."

Chrysler has data showing the death rate in the disputed Jeeps from fires in rear crashes is not significantly higher than for other SUVs of the period. And it has charted some two dozen vehicles with higher death rates that haven't been recalled.

Those would be strong arguments in a data battle with NHTSA and in a court case.

But the Center for Auto Safety says it believes that the fatality database generally used by car companies, law enforcement organizations and regulators would show that deaths in those vehicles were caused by the crash itself, not by a fire that followed.

Clarence Ditlow, head of the center, an advocacy group, expected to have complete data soon showing that the Jeeps were, in fact, among the worst.

Ditlow has suggested that Chrysler add a skid plate to the 90% of the disputed Jeeps that didn't have it as a factory option. Skid plates are sold as protection against rocks and downed trees in off-road driving.

He also said Chrysler could have installed longer fuel-filler hoses so they wouldn't pull off the tank and cause a leak as easily in a rear crash.