Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

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  

Distractor In Chief: Trump Assails GM Over Car Production In Mexico

DETROIT/WASHINGTON (Reuters) – President-elect Donald Trump on Tuesday threatened to impose a “big border tax” on General Motors Co for making some of its Chevrolet Cruze compact cars in Mexico, an arrangement the largest U.S. automaker defended as part of its strategy to serve global customers, not sell them in the United States.

Trump’s comments marked his latest broadside aimed at an American company over jobs, imports and costs before he takes office on Jan. 20, signaling an uncommon degree of intervention for an incoming U.S. president into corporate affairs.

“General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!” Trump said in a post on Twitter.

Trump did not provide further details but previously vowed to hit companies that shift production from America to other countries with a 35 percent tax on their exports into the United States. He also has denounced the North American Free Trade Agreement between the United States, Mexico and Canada.

GM, the world’s No. 3 automaker, said it sold about 190,000 Cruze cars in the United States in 2016. All of the sedan versions sold in the United States, or about 185,500, were built at its plant in Lordstown, Ohio. About 4,500 hatchback versions of the Cruze were assembled in Mexico and sold in the United States.

“GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S.” it said in a statement posed on its website.

The Cruze is one of GM’s best-selling cars, although its sales numbers were down significantly in 2016.

Shares of GM rose 1 percent to $35.19 after falling about 1 percent following Trump’s tweet before the market opened.

Since winning the Nov. 8 presidential election, Trump has targeted GM’s rival Ford Motor Co, United Technologies Inc, Boeing Co, and Lockheed Martin Corp. Trump also has touted decisions by companies to keep some production in the United States, including United’s Carrier unit in Indiana.

Last month, Trump announced the formation of a council to advise him on job creation comprised of leaders from a variety of major U.S. corporations including GM Chief Executive Officer Mary Barra.

GM said in 2015 it would build its next-generation Chevrolet Cruze compact in Mexico as automakers look to expand in the Latin American nation to take advantage of low labor costs and free trade agreements. The company said in 2015 it would invest $350 million to produce the Cruze at its plant in Coahuila as part of the $5 billion investment in its Mexican plants announced in 2014, creating 5,600 jobs.

GM said last year it would import some Cruze cars from Mexico.

Trump, a Republican who will succeed Democratic President Barack Obama, campaigned for president using tough rhetoric on trade and promises to protect American workers, and targeted several companies by name.

His latest comments come as a congressional Republican tax proposal meant to boost U.S. manufacturing faces mounting pressure from industries that rely heavily on imported goods or parts.

‘BORDER ADJUSTABILITY’

Last month, 81 industry groups including several automaker groups rejected the proposal, known as “border adjustability.” The policy would help manufacturers by exempting export revenues from corporate taxes. But it would tax imports, hitting import-dependent industries.

According to Automotive News, GM began producing the Cruze in Mexico last year, making 52,631 cars there. In comparison, it built 319,536 of them in the United States. Previous versions of the Cruze sold in Mexico were made in a GM South Korea plant, it reported.

The shift is part of a larger trend among Detroit’s Big Three automakers to produce more small cars for the North American market in Mexico in an effort to lower labor costs, while using higher-paid U.S. workers to build more profitable trucks, sport utility vehicles and luxury cars.

In November, GM said it planned in early 2017 to lay off 2,000 employees at two U.S. auto plants, including the one in Lordstown. U.S. small car sales have been hurt by lagging consumer demand and low gas prices. GM’s U.S. Cruze sales were down 18 percent through November.

GM will halt the third shift at the Lordstown plant on Jan. 23, cutting 1,250 jobs.

Representatives for the United Auto Workers union could not be reached immediately for a response to Trump’s comments.

(Additional reporting by Susan Heavey; Editing by Jeffrey Benkoe and Will Dunham)

IMAGE: General Motors introduces the new 2016 Chevy Cruze vehicle at the Filmore Theater in Detroit, Michigan June 24, 2015. REUTERS/Rebecca Cook