Tag: fiat
EPA Accuses Fiat Chrysler Of Excess Diesel Emissions

EPA Accuses Fiat Chrysler Of Excess Diesel Emissions

NEW YORK/DETROIT (Reuters) – The U.S. Environmental Protection Agency on Thursday accused Fiat Chrysler Automobiles NV of illegally using hidden software to allow excess diesel emissions to go undetected, the result of a probe that stemmed from regulators’ investigation of rival Volkswagen AG.

FCA shares plummeted as the maximum fine is about $4.6 billion. The EPA action affects 104,000 U.S. trucks and SUVs sold since 2014, about one-sixth the vehicles in the Volkswagen case.

The EPA and California Air Resources Board told Fiat Chrysler it believes its undeclared auxiliary emissions control software allowed vehicles to generate excess pollution in violation of the law and each issued notices of violation.

The U.S. Justice Department is investigating, Fiat Chrysler said Thursday. New York Attorney General Eric Schneiderman said in a statement he is “deeply troubled” by the EPA findings and “will investigate the claims against Fiat Chrysler and stands ready to work with our state and federal partners.”

Fiat Chrysler Chief Executive Sergio Marchionne angrily rejected the allegations at a hastily-assembled conference call with reporters, saying there was no wrongdoing and the company never attempted to create software to cheat emissions rules by detecting when the vehicle was in test mode.

He characterized the dispute as whether the automaker had completely disclosed software that protects the engine, adding the company was planning updated software to address EPA concerns.

He said the EPA and the company could have settled the issue in “a more efficient way” without the EPA announcement, and he said “I’m really pissed off” about reports that equate FCA’s issues with VW’s.

“The way that it has been described, I think, has been unfair to FCA, and that is the thing that disturbs me most,” Marchionne said.

He also suggested regulators had a “belligerent” view of automakers. “We don’t belong to a class of criminals,” he said. “We’re not trying to break the bloody law.”

The company has no plans to stop selling 2016 U.S. diesel models.

EPA has reviews ongoing of other automakers’ emissions systems, but it is not clear if they have found any additional wrongdoing.

Regulators said FCA failed to disclose engine management software in 104,000 U.S. 2014-2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0-liter diesel engines. The undisclosed software results in increased emissions of nitrogen oxides (NOx).

Cynthia Giles, an EPA official, said Fiat Chrysler had an obligation to disclose the “illegal software” but has not decided whether to label them “defeat devices.”

The EPA said it found at least eight undisclosed pieces of software that can alter how a vehicle emits air pollution. Fiat Chrysler had recalled vehicles for one of the undisclosed software.

By contesting the charge, FCA will push the case into the administration of President-elect Donald Trump. It is not clear how Trump’s EPA will handle this or similar issues. Trump has nominated Oklahoma Attorney General Scott Pruitt, a critic of federal environmental regulation, to lead EPA.

Efraim Levy, analyst with CFRA, said FCA stands to “get a fresh start with the Trump administration.”

SHARES SLIDE

U.S.-listed shares were last down 10 percent, cutting their earlier losses. Milan-listed shares closed down 16 percent, weighing on European stock markets.

The EPA announcement comes amid closer scrutiny of automakers after Volkswagen AG admitted to cheating diesel emissions tests in 580,000 U.S. vehicles.

In 2015, EPA said it would review all U.S. diesel vehicles following an admission from Volkswagen that it installed software in cars allowing them to emit up to 40 times legally permissible level of pollution.

On Wednesday, Volkswagen agreed to pay $4.3 billion in criminal and civil fines and plead guilty to three felonies for misleading regulators and selling polluting vehicles.

Fiat Chrysler could face fines of $44,539 per vehicle if it is proven that it violated emissions rules.

European regulators have also raised questions about Fiat Chrysler diesels.

Last fall, Germany wrote a letter to the European Commission accusing FCA of using an illegal device to switch off exhaust treatment systems in diesel engines in Fiat and Jeep vehicles sold in Europe.

(Reporting by David Shepardson in New York and Bernie Woodall in Detroit; Additional reporting by Nick Carey in Chicago, Agnieszka Flak in Milan and Giles Guillaume in Paris; Editing by Nick Zieminski)

IMAGE: The Fiat logo is pictured at a car dealership at Motor Village in Los Angeles, California October 13, 2014.  REUTERS/Mario Anzuoni  

Chrysler Posts $690-Million, 1st-Quarter Loss

Chrysler Posts $690-Million, 1st-Quarter Loss

By Brent Snavely, Detroit Free Press

DETROIT — Chrysler lost $690 million during the first three months of the year because of costs of repaying debt and repurchasing shares held by a UAW trust.

The Auburn Hills, Michigan, automaker said it spent $504 million to repay debt to the UAW Retiree Medical Benefits Trust and also recorded a $672-million charge to cover the cost of purchasing shares held by the trust.

For the first three months of the year, Chrysler would have earned $486 million without those expenses of nearly $1.2 billion. That’s almost triple the $166 million profits the company reported for the same period a year ago.

The charges are part of a $4.35 billion deal struck between Fiat, Chrysler and the UAW trust that paved the way for Fiat to own all of Chrysler. It was the first time Chrysler reported a quarterly loss since the second quarter of 2011.

“I think we are going to see a strong improvement in the second quarter, but we are going to have a back-loaded second half,” said Richard Palmer, Chrysler’s chief financial officer, because of the launch of the 2015 Chrysler 200 sedan.

Palmer said Chrysler began shipping the all-new Chrysler 200 last week. The 200 is a midsize sedan that is substantially better than the outgoing model.

Chrysler continues to report its financial results on a stand-alone basis even though it is fully owned by Italian automaker Fiat because of outstanding bonds on the U.S. market.

The automaker’s first quarter revenue rose 23 percent to $18.9 billion. Chrysler’s total cash decreased to $12.4 billion from 13.3 billion at the end of 2013. Chrysler’s cash declined because the automaker also made a $1.9 billion payment to the UAW trust as part of Fiat’s acquisition agreement.

Palmer said Fiat and Chrysler eventually wants to restructure its bond debt that is due over the next two years but is still weighing its options.

“We clearly need to look at simplifying the capital structure of the group at an FCA level,” Palmer said. “We are looking to diversity our debt between Europe and the U.S.”

The Auburn Hills automaker’s earnings results come less than a week after Fiat and Chrysler CEO Sergio Marchionne presented an ambitious five-year strategic plan that calls for global sales of the combined automaker to increase global sales from about 4.4 million to 7 million cars and trucks by 2018.

Fiat’s stock fell 12 percent last Wednesday, the day after Marchionne presented the plan.

“We’ve had a phenomenal run in 2014 … and I am not surprised that people took some money off the table,” Marchionne said last week. “The plan is aggressive.”

Fiat’s stock fell 7 cents, or 0.86 percent, Monday to close at 7.47 euro per share.

Chrysler’s first quarter performance was aided by the introduction of the Jeep Cherokee, brisk sales of its Ram pickups and a U.S. industry that continues to see gradual sales increases.

Globally, Chrysler sold 621,000 new cars and trucks during the first three months of the year, up 10 percent from a year earlier. In the U.S., the company’s market share grew to 12.5 percent for the first quarter, up from 11.4 percent last year.

Chrysler also confirmed previous guidance for the year that it will earn between $2.3 billion and $2.5 billion this year before one-time charges and world-wide shipments of 2.8 million vehicles.

Last week Fiat reported a first-quarter loss of 319 million euros ($444 million) during the first three months of the year.

Fiat also was affected by a 315 million euros ($418 million) charge related to the cost of paying the UAW Retiree Medical Benefits Trust for the remaining Chrysler shares and the devaluation of Venezuela’s currency.

Fiat and Chrysler announced a deal on January 1 that called for the automakers to acquire the 41.5 percent of Chrysler owned by the UAW Trust for $4.35 billion. That deal closed on January 21.

Now, the two companies are working toward the completion of the merger and a name change to Fiat Chrysler Automobiles. That name, along with an exchange of Fiat shares for shares in Fiat Chrysler Automobiles, will be up for a vote by Fiat shareholders this summer.

Fiat and Chrysler are hoping to list the stock of the combined company under the symbol FCA on the New York Stock Exchange by October 1.

The company headquarters will be located in London, which will help Marchionne avoid political backlash both in Italy and the U.S.

“It’s clear that … group executive functions, the board, my office, and some of my functions need to operate out of London,” Marchionne said during a news conference for CNH Industrial, an agricultural equipment manufacturer that he also leads. “That doesn’t mean I give up my operating responsibilities in the U.S. I will still do that.”

AFP Photo/Stan Honda
For more business- and economy-related news, sign up for our daily email newsletter!

To Republicans’ Consternation, Chrysler Turns Profits

Reuters reports that Chrysler’s sales have outpaced European carmaker — and Chrysler parent company — Fiat’s sales in recent months. According to the analysis, Chrysler June earnings ($155 million) were only slightly less than Fiat’s three month total (Fiat earned $175 million from April through June).

These impressive numbers have enabled the once-troubled American company to pay back its debt to the United States government well ahead of schedule; Chrysler was not expected to pay back its debt until 2017. Furthermore, the 2008 deal was supposed to cost American taxpayers $40 billion but will now only cost them $1.3 billion , a relatively low cost considering the high stakes of the deal and the tens of thousands of jobs saved.

These numbers must come as a surprise to the many Republican politicians who came out strongly in opposition to the government bailout in 2008. For example, Richard Shelby, an Alabama Republican, referred to the intervention as merely “delaying [the auto industry’s] funeral.”

Similarly, other Republicans thought that the 2008 bailout would stymie innovation and do no more than prolong the decline of the American auto industry. In an editorial for The New York Times, Republican 2012 presidential frontrunner Mitt Romney declared that if the bailout went through, we could “kiss the American automotive industry goodbye.” He went on to say that if the bailout passed, it would fail to reverse “the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses.”

The most recent reports seem to prove the former exec whose candidacy is predicated on a history of turning around failing businesses wrong, as Chrysler has come out more successful than its European buyer. Instead of costing American taxpayers tens of billions of dollars, the overall auto rescue effort has saved millions of jobs and preserved an icon of American manufacturing.