The decision reverses the auto maker's previous rejection of a regulator's request to recall of as many as 2.7 million Jeeps. The recall covers 1993-1998 model year Jeep Grand Cherokee and 2002-2007 Jeep Liberty sport-utility vehicles.
Chrysler said its dealers will install towing hitches on the back of vehicles that don't have them, putting more metal between the fuel tank and the rear of the car to absorb an impact. In addition, Chrysler said dealers would inspect and if needed replace at no cost to the owner non-Chrysler Mopar brand towing hitches on 1.14 million 1999-2004 Jeep Grand Cherokees.
The National Highway Traffic Safety Administration said it would continue the nearly three-year-long inquiry, "pending the agency's review of the documents provided by Chrysler in its recall action."
In a statement, the agency said "consumers impacted by the safety recall and customer satisfaction campaign should have their vehicles serviced promptly once they received notification."
Chrysler, majority owned by Italy's Fiat SpA, reiterated in a statement that its Jeeps aren't defective.
In a June 3 letter, NHTSA requested that Chrysler recall the vehicles based on the government's analysis that the Jeeps had a much higher rate of fire in rear-end crashes than similar midsize SUVs, such as the Ford Explorer and Toyota 4Runner.
NHTSA linked the fuel tank placement and design to fiery rear-end collisions that led to 51 deaths. Chrysler, in a rebuttal released earlier this month, said NHTSA's analysis was flawed, and that the Jeeps in question met all federal safety standards, and had better safety records than similar vehicles.
A day after the agency issued its recall request, the driver of a 1993 Jeep Grand Cherokee Laredo was killed in Houston when his stalled vehicle was struck from behind by a Dodge Ram 4500 tow truck.
"The force of the collision caused the Jeep to catch fire," according to the report prepared by the Harris County Sheriff's Office. The driver "died at the scene due to injuries sustained in the collision," it continued.
NHTSA said it "is in communication with the local authorities who are investigating the crash." The agency declined to comment further on the recall request.
A Chrysler spokesman said: "Reports indicate this was a high-speed, high-energy crash with a truck."
"Notwithstanding those factors, we still are confident in the safety and integrity of our vehicles. Getting hit by a truck at highway speeds is a severe, high-energy crash that usually ends in tragedy."
Chrysler's initial decision to reject the recall request was unusual but not unprecedented. Most auto makers agree to conduct recalls at NHTSA's request.
Chrysler Chief Executive Sergio Marchionne endorsed the decision to fight NHTSA in a June 4 statement that was accompanied by what Chrysler called a "white paper" detailing what the company said were flaws in NHTSA's analysis.
It is unclear how much the recall would cost Chrysler. Dealers said they expect a trailer hitch assembly to cost about $200 or less per vehicle.
Clarence Ditlow, executive director for the Washington, D.C.-based nonprofit Center for Auto Safety, which had asked NHTSA to probe the Jeep fuel tank design in August 2010, said regulators should test the company's recommended fix.
"We call on NHTSA to do crash tests of Chrysler's proposed remedy, just as it did with Ford's proposed remedy for the Pinto in 1978," he said.
Dealers said ahead of Tuesday's recall decision that potential buyers of Jeep's current models, which have their gas tanks located in front of the rear axle, haven't been put off by the controversy.
"Honestly, I haven't been asked once about it," said Blake Helfman, general sales manager at River Oaks Chrysler Jeep Dodge Ram in Houston. "Sales are rocking and rolling for Jeep," he added.