Chrysler to Replace Rear Door Latches on Older Minivans

Strategic Insights -

A possible deal between Chrysler Corp. and the US government could result in the replacement of rear door latches on up to four million minivans built between 1984 and 1994. The decision comes after the US National Highway Traffic Safety Administration received 79 reports of door openings during collisions, resulting in 87 ejections, 28 deaths, and 60 injuries. If a negotiated settlement produces a "service campaign" rather than a formal recall, Chrysler would avoid acknowledging the issue as a safety problem and would not be required to notify owners.

Key Takeaways:

  • Chrysler is close to announcing a deal to replace rear door latches on its older minivans, which could affect up to four million vehicles.
  • The decision follows 79 reports of door openings during collisions, resulting in 87 ejections, 28 deaths, and 60 injuries.
  • A possible deal would replace door latches on Dodge Caravan, Plymouth Voyager, and Chrysler Town and Country minivans built between 1984 and 1994.
  • The US National Highway Traffic Safety Administration is investigating the latch design.
  • A negotiated settlement would not require Chrysler to acknowledge the issue as a safety problem or notify owners in the traditional sense.
  • The cost of replacing the rear latch on each vehicle is estimated to be around $30-$50, totaling approximately $200 million.
  • Chrysler earned a record profit of $3.71 billion in 1994.
  • Industry analysts estimate that the cost of replacing the latches would be relatively low for the company.
  • David Healy, auto analyst with S. G. Warburg & Co., stated that the cost is not great but that Chrysler would likely fight the decision.
  • John Casesa, auto analyst with Wertheim Schroder & Co., noted that even if a recall were issued, it would not have a substantial impact on the company's balance sheet.

Statistics:

  • Up to four million minivans could be affected by the deal.
  • 79 reports of door openings during collisions have been received by the US National Highway Traffic Safety Administration.
  • 87 ejections, 28 deaths, and 60 injuries have occurred as a result of the door openings during collisions.
  • The cost of replacing the rear latch on each vehicle is estimated to be around $30-$50.
  • The total cost of replacing the rear latches on all affected vehicles is estimated to be approximately $200 million.
  • Chrysler earned a record profit of $3.71 billion in 1994.

Sources:

  • The Detroit Free Press
  • National Highway Traffic Safety Administration
  • Reuters
  • Bloomberg