The Italian carmaker, Fiat, has been shortchanging its customers who have been returning their rusted-out cars under a government-negotiated recall settlement. Transportation Department officials said yesterday.
And, DOT said, the government may seek to have the company take back more cars for premature rusting problems.
In an unusual announcement, the National Highway Traffic Safety Administration announced that it would conduct a hearing at DOT headquarters here Sept. 26 to determine if Fiat has been underpaying owners of 1970-71 model 850 Fiat Spyders who were promised market value prices for their overly rusted cars.
The hearing also will probe the issue of whether or not Fiat should also be made to recall 1970-74 model 124 vehicles for similar rust problems.
Last January, NHTSA notified Fiat that the agency had made a preliminary determination that a safety-related defect existed in the two models of cars listed above. That determination was based on the charge that the underbodies of those cars were subject to premature rusting and corrosion, which leads to bending or separation of such structural components as suspension systems, rocker panels, floor pans and steering components.
Such conditions, the government stated, could be the cause of accidents and injuries.
But on March 16, the safety agency reached agreement with the Italian automaker, under which Fiat agreed to recall the 1970-71 850 Spyders and pay the owners of those cars the original purchase price minus a fair depreciation, as if the car was in perfect condition.
In addition, Fiat convinced the government that there was no problem with the 124 models, and thus they should not have to be recalled.
But now it appears that Fiat has been grossly underpaying its customers for the returned cars, NHTSA says. Consumer reports to the agency show that the company has been paying between $100 and $600 for the 850's, which the government claims should be worth more than $1,000.
In addition, NHTSA has learned, Fiat has been secretly buying back some 124 models from owners who have complained about rusting problems. And, NHTSA administrator Joan Claybrook adds, "Besides carrying on what appears to be an illegal recall on the 124's, it looks like they were underpaying those customers as well.
"It's ironic," she added, "that they are telling customers that they can't give them more money for the cars because they are rusted out, when that is the reason they are taking them back in the first place."
Claybrook characterized the complaints that have been received by the agency about Fiat as "serious."
Among other charges, it has been alleged that Fiat told customers that it had to pay the lower prices for the cars because the government had set the prices.
In addition, it was charged that Fiat was using "coercive tactics" to make customers sell their cars back, rather than have them repaired, an option offered under the recall.
A Fiat spokesman said the company had no comment because NHTSA had yet to "transmit its information" to the company.