Troubles for Fiat?

It is worth keeping an eye on a developing story in the United States, where Fiat Chrysler Automobiles has been accused of not telling the authorities there about software which regulates emissions in some of its diesel vehicles. The US Environmental Protection Agency says that FCA has broken the law by using such technology in more its 2014-2016 Jeeps and its Dodge Ram products.

Fiat Chrysler boss Sergio Marchionne has dismissed the EPA allegations as being “absolute nonsense”, but the news has resulted in FCA’s share price falling dramatically in both New York and Milan.

Fiat Chrysler said that it would demonstrate that the emissions control systems were not designed to get around emissions tests.

The Department of Justice said VW had a long-running scheme to sell about 590,000 diesel vehicles in the US fitted with a defeat device to cheat on emissions tests.

Marchionne is head of Fiat and Ferrari, although the two are separate entities. there is believed to be a strategy for Fiat to use Ferrari technology to give Alfa Romeo an F1 presence, but this might be impossible if a scandal develops.

36 thoughts on “Troubles for Fiat?

  1. 104,000 U.S. trucks and SUVs sold here since 2014 are potentially involved,

    This means a possibly fine for violating envrio protections of like 4.6 or 4.7 billion USD. EPA accuses FCA of ‘serious violation’ of emissions law.

    Good. PUnish to maximum reasonable extent of law!

  2. Crikey! if this turns out to be true (why wouldn’t it be, unless some entity or other has it in for Sergio?) and subsequent pay outs if FCA are culpable would put a serious dent in company/divisional motor racing budgets and quite possible see Mr Marchionne not staying until the end of 2018?

  3. I know for a fact this is standard practice in most car manufacturers. Why they decided to go after VW and now Fiat eludes me. This is usually what happens when you have predatory capitalism, where final quarters profits are more important human safety. Just ask JP Morgan, Deutsche Bank, Bank of America, Wells Fargo and all the large banks who have been paying enormous fines to get away with it.

    Also seems to me both the CEO of VW and Fiat will walk away with multi-million dolar bonuses, leaving the bill to worldwide shareholders/investors who see the price of their shares drop sharply.

      1. In the case of VW, you couldn’t be more wrong – the VW Group comfortably dwarfs those banks.

        The VW Group is the 7th largest company in the world, and the annual revenues of the VW Group are almost equal to that of Bank of America, JP Morgan Chase and Wells Fargo combined. If anything, your theory should imply that it would be harder, not easier, to go after VW, so your argument doesn’t really stack up.

        With regards to this case, whilst inevitably it seems that most people have just automatically jumped to a conclusion of guilt (many of whom have probably just looked at the header that Joe put together and not bothered reading the rest of the article, or even looked into what the story actually involves), it would seem that the situation is much more of a grey area than in the case of VW.

        With Fiat, unlike in the case of VW, where the software would always be inactive in the real world, the software that is under investigation by the EPA is active at least part of the time in the real world (i.e. only deactivated in more abnormal weather conditions). The initial searches have not yet provided evidence of intent to subvert the tests – if anything, the initial finding potentially point more towards human error (somebody installing the wrong software package) rather than intentional malice.

        1. Thank you. Rightly or wrongly, I definitely understood last year that -everyone- was calibrating their engine management to behave completely differently from normal when driven -as if- it was being emissions tested (hence theoretically replicable on a test track with the vehicle moving), but that VAG calibrated theirs to actually check if a test was underway (wheels turning, no physical vehicle movement or some other such tell), and engage a whole different mode only in that case. And that that allowed them to avoid adding a specific (& expensive) piece of emissions control equipment to a particular class of engine. Which put them out of step with & at a financial advantage to their competitors, who did have to use that equipment to hit the mark.

          The test as written hasn’t much real world meaning, and the rules about what kinds of hacks are and aren’t allowed are pretty irrelevant in practice. But they’re not legally irrelevant. Either the reporting on VAG was seriously misleading, or else no-one else has done anything so extreme, or so easily categorized as illegal. We’ll see.

  4. Sincere condolences on your sister’s passing – I read the Telegraph article and was again amazed at the work she had done, only at the end did I put it together with what you had written following your other recent bereavement.
    RIP.

    Sergio Marchionne has a strong case here and one the incoming President will want to be aware of. Fiat don’t sell cars in the US, Ferrari and Maserati do but their emissions were never on the “eco-friendly” scale and the volumes are insignificant in the overall vehicle sales in the US. So that just leaves Chrysler – and Fiat bought this as a basket case and has gone a long way to reviving the business. A costly EPA case may point Marchionne in the direction of closing Chrysler at a time when the new President is pushing for automotive jobs in the US.
    There is no sense that the President Elect will take a softly softly, arms length approach with the EPA when jobs are on the line.

    1. Fiat sells plenty of cars in the US… I see the “new” Fiat 500s daily, and a handful of the new 124 Spiders too, here in California (still part of the US).

    2. Sorry, Fiat re-entered the US market with the 500. Followed by the 500xl, then the 124 (?)- Italian Miata. Plus their cars or chassis have been used in in all Chrysler divisions, Jeep, Dodge, Chrysler, and Ram.

  5. Dear Joe

    Regarding Switzerland and its ‘respectful’ population, you might want to add that this description excludes a WW2 history of collaboration with the Nazis, and of preventing refugees from entering the country. In the post-war period, the Swiss banks and other authorities did everything they could to prevent rightful owners and heirs of often-murdered owners, retrieve assets which they had in their safekeeping, including vast amounts of cash, artworks, precious jewellery.

    Not quite as squeaky clean as some would have us believe.

    Best regards

    Amnon Needham

    Global Search Partners

    T: +44 7770 397 152

    E: needham@globalsearchpartners.com

    http://www.globalsearchpartners.com

    This mail has been sent from Global Search Partners.

    Confidentiality note: this message is intended only for the person or entity to which it is addressed. It may contain confidential and/or privileged material. Any review, transmission, dissemination or other use, or taking of any action in reliance upon this message by persons or entities other than the intended recipient is prohibited and may be unlawful. If you received this message in error, please contact the sender and delete it from your computer.

    1. I’m not sure where you and your organization have gathered the information you’ve posted here but suffice it to say you’re both in need of a serious re-read of CH history especially as it pertains to their behavior in WWII . Suffice it to say in as succinct a manner as possible CH never ‘ collaborated ‘ nor ‘ colluded’ with Hitler’s Nazi regime . What they did .. albeit wrong .. was to turn a blind eye in order to maintain CH’s neutrality . And yes after the war CH banks were reluctant at best to return stolen property to their rightful owners .. with much of the problem lying with CH’s banking and privacy practices as well as the inability to verify who the original owners were in most cases . And though not in defense of such practices .. the fact is banks museums etc worldwide were and still are reluctant to returning stolen goods from WWII to their original owners

      In as far as CH banking practices since WWII .. most certainly due to their privacy etc practices they have over the years hurt many a foreign economy etc … as has every banking system in every country across the globe . But to their credit CH banks do not stab their own people in the back as do banks across the world . In fact just the opposite .. subsidizing small businesses , family farms … financing Global Warming initiatives as well as paying to mitigate the effect of GW in CH .

      Which is to say in conclusion .. nobody is perfect .. but CH isn’t the nearly monster you and your organization chose to portray them as either .

  6. While FCA has recovered some of its huge losses over the last year, Marchionne is still harping on about merging with GM despite having been told he is not wanted by the lady in charge. However his tenure is up in 2018 when he retires so I very much doubt we shall ever see Alfa back under his auspices, there is not enough time, he does not have or could not justify the huge funds needed to the shareholders. (While Joe has pointed out that Ferrari runs its F1 team at a profit, that may very well change under Libertys reign) Losses he does have plenty of and I would bet on further strikes in some FCA plants in Italy this summer as he continues to try and cut costs. (Though there will be other kinds of Italian political chaos and €uro collapse to hamper any new enterprise.)
    Some alarm must be building at the number of VW executives who have been arrested by the USA and Korea. VW even having gone so far as to tell its people to stay in Germany where its traditional political ties offer some protection, though even there Herr Winterkorn the former CEO has been called before a parliamentary committee.

  7. Hilarious take on this over at Sniff Petrol. Hope it’s OK to mention another website that isn’t really a direct competitor, Joe

  8. My recommendation is that the FCA brass blame the software supplier, same as VW used !
    In this post-truth era, that should buy them some time…..

  9. Aside from German passenger cars, Diesel engines’ main market had been in the 3/4 ton and bigger pickup trucks which are exempt from mileage testing by the EPA. By putting Diesels in the Jeeps and 1/2 ton pickups, the Ram 1500, they likely encountered greater scrutiny.
    I wonder whether Daimler, or BMW had any problems, being one of the only other sources of smaller diesel here in the US.
    GM had recently added a diesel to their small <1/2 ton truck, the Colorado, and to the small compact model the Cruze. I know there's some popularity for the truck, but think sales of the diesel Cruze haven't been as good due to a price premium.
    But the latest news with FCA make me wonder, if the tests and failures or cheats are too stringent or if modern design of the engines or emission controls can't meet the standards without severely compromising performance and Efficiency?

  10. Amazing news.
    Another manufacturer on the fiddle.
    Theme tune to Minder…
    While Arthur Daley tries to flog a car to his Minder…music in full swing.
    No wonder Marchionne wants to decamp before 2019. He doesn’t want to get embroiled in the Fiat Chrysler Fiasco.
    What other manufacturers will fall fowl of a little computer flatware that over rides the cars actual emissions.
    It’s like Arthur Daley de- clocking the mileage on an old Jag and then trying to sell it back to a Jag dealership. A little Dodgy indeed !!

  11. A few months back you posted an article about the VW situation. I remember then someone posting on here along the lines of: “If you think VW was bad just wait till it comes out about Ferrari” so I guess this is just the start of that…

    Cheers!

  12. Well Joe . As significant as this newest EmissionsGate may seem FCA as well as GM and Ford are facing a more immediate and devastating problem . That being an over stock of inventory . GM’s cars are now at a 120 – 177 day inventory [ tis a great time to buy a C7 as its at the top of the pile at 177 days ] FCA across the board including their previous cash cow JEEP is right up there as well [ 110 – 150 days ] Ford is trailing but not by much … yet ironically is the only one of the three admitting to the problem

    [ to put this in perspective 60 days inventory is reasonable 30 days is optimal ]

    Toss in the fact that all three .. but especially GM and FCA are offering incentives so extreme in order to push that profits are at best minimal but more often non- existent and you’ve got yourself a Bubble done gone burst . Fact is the only manufacture not caught up in this inventory glut is … Subaru . So much for the 350 lb orangutan in the room’s ‘ Make America Great ( white ) Again ‘ agenda . Along with the news that Victory M/C has gone under and the Carrier story was a scam … greatness aint exactly looking to be in our future any time soon .

    As far as FCA sales worldwide ? In the toilet sums it up nicely from Maserati right on down to FIAT .. and most certainly this newest FCA scandal [ number three over the last 16 months ] is only going to exacerbate the situation . So yup Joe .. things is looking mighty bleak when it comes to the automotive industry

  13. To me it never made much sense for Marchionne to spend so much time with Ferrari when Fiat has such an abysmal reliability record in the US. His efforts are totally misplaced.

  14. Thanks for keeping this blog going during times of personal grief, Joe, and for sharing the reasons for it. Belated but sincere condolences.

    I cannot feel much sympathy for the Fiat group as headed by Mr. Marchionne, which of course includes Ferrari. His ‘reign’ over the F1 team seems just that. and counterproductive to the team and to the sport.

  15. LOL. The bloke appointed as new EPA administrator, self-described “leading advocate against the EPA’s activist agenda,” Scott Pruitt, has sued the EPA numerous times for allegedly meddling with business. Want to know what’s going to happen to or be the penalty imposed on FCA? Nothing.

  16. Well i know i’ll get castigated,but frankly the whole emissions thing is just a corollary of what happens when politicians impose unrealistic terms on businesses. I’d assume that the makers all found that they could not hit the imposed target, and used modern electronic methods to resolve the issue so they could carry on building vehicles.
    I know they are terrible ogres!! But doesn’t anyone realize that just imposing some specious target for something in the US and Europe, doesn’t drastically alter the big picture?
    Places such as China, Brazil, India, Africa, cause far more pollution of all types, and it travels, it don’t just stay over or around or in those areas!
    I’ve heard said for years, isn’t it wonderful that we westerners can buy a pair of decent jeans or whatever, for £5?? No it isn’t, because to do that someone not in the west is being treated like a slave to make the item…..and has to live with the pollution as well. People in the west love Apple products, but what about how they are made??
    I’m sure some will say i’m being contradictory, i’m not, i’m just being pragmatic.
    If people really mean what they say and want to improve life for humanity and the planet, they should know that there are consequences if one actually does this as a reality and not just as a sop to mass consciousness.

    1. Thanks for writing this Damian. I was going to say something on similar lines but you have beaten me to it! I have further issues with politicians’ use of headline statistics used to support the case for draconian emissions levels when the conclusions quoted partucularly on excess deaths cannot be substantiated by rigorous statistical logic. Thing is most people accept the conclusions as they do not understand the implications of the models being used. I used to ‘cook’ statistics for the Health Authority that I worked for to support our agenda that hospital admissions for alcohol related conditions were on the inncrease. I considered the methododogy, based on a paper from a northern english university, to be tenuous in the extreme! In the light of this I do not buy into the quoted large numbers of ‘excess deaths’ when UK death certificates will never have any mention of air polution on them. Car polution is not to be ignored but reduction needs a more honest approach than forcing manufacturers into corners that they cannot get out of until better technologies can be developed. Diesels are very much cleaner than in the past but no matter how much they improve there will be politicians who want to ban them altogether and to them, the inevitable VW and Fiat failures have them rubbing their hands with glee.

  17. I would not be surprised if Renault were also to suffer crippling fines for diesel emissions exceeding the US and EU regulations. The BBC ran a program, in the Horizon series I think, where they got several car tested in the nearest test centre that dared co-operate, in I think, Slovakia. Renault exceeded the permitted levels by thirteen times. All cars tested failed by multiples of the allowed amount. It needs to be remembered that the emission tests only apply in ideal conditions when the engine and all systems have reached correct operating temperature, this may be a small part of any urban journey.
    The current outrage is re NOX emission, yhis was not part of the test, nor is it even mentioned in the published figures for cars sold in the UK.

    If Renault are still struggling in F1 throughout this year and there is pressure to cut expenditure, the eye-watering mega fines that the US authorities are so fond of may affect their future in F1.

    Meanwhile we are relegated by the Germans to a country not worth offering compensation to, that may change.

      1. I thought the same.

        Then I remembered Nissan. Who are pretty big stateside.

        If Renault have done something similar (& I actually thought that VAG had gone some way further than FCA or anyone else, so this news took me by surprise) they might be in a bit of trouble.

        1. Reading a Car & Driver piece today, it seems that Nissan just missed out (within a few hundred units) of selling a third of a million vehicles in the US 2016.

          But that was only counting a single model. (They say ‘Rogue’, we say, um, X-Trail, I -think-.)

          I guess those will be overwhelmingly petrol. Even so. Gulp.

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