USA says Fiat Chrysler used software to beat emissions tests

Fiat Chrysler last week announced updates to its emissions software programs. Zacks Investment Research downgraded shares of Fiat Chrysler Automobiles NV from a hold rating to a sell rating in a report on Monday, January 2nd.

Earlier this month, the German automaker dropped plans to seek USA approval to sell 2017 Mercedes-Benz diesel models.

The Italian automaker said it was "disappointed" in the lawsuit and "intends to defend itself vigorously, particularly against any claims that the Company engaged in any deliberate scheme to install defeat devices to cheat USA emissions tests".

Fiat sold almost 50,000 diesel Ram pickups in the United States in each year of 2015 and 2016, making it the largest-selling diesel-powered light truck.

In January, the EPA identified eight emissions controls in the Jeep and Ram diesels that weren't disclosed as required in applications for clean-air certifications filed with the agency.

Just how serious is this for Fiat Chrysler? Volkswagen agreed to pay $4.3 billion in criminal and civil penalties.

FCA US could face a sanction of up to $4.63 billion for allegedly breaking the US emissions rules, CNBC reported.

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That ultimately snowballed into a global scandal that has cost VW Group more than $20 billion and ended the development of new diesel vehicles from Volkswagen, Audi, and Porsche for the US market.

For comparison, Volkswagen was accused of selling 482,000 cars equipped with emissions-cheating defeat devices in the US.

The federal government claims Fiat Chrysler intentionally installed software in some vehicles to circumvent Environmental Protection Agency emission standards, according to the new civil complaint filed Tuesday. But there's also the question of what is, and what isn't, a "defeat device".

The complaint, by the Justice Department's Environmental and Natural Resources Division, says the devices, which tell the vehicle to operate at legal levels only during emissions testing, violate the federal Clean Air Act. Marchionne argued in the call that Fiat never attempted to create software to cheat emissions rules. At the same time, it's planning a software update that it hopes will address officials' concerns - whether or not there was intentional deception, the company isn't taking any chances.

FCA, the seventh-largest automaker in the world based on total annual vehicle sales, is an worldwide automotive group. It earned $2.6 billion in profit in 2016 on $116 billion in sales.

US -listed Fiat Chrysler shares were down 2.9 percent at $10.44. The EPA said in a statement Tuesday it will try to move its case to the same court.

Unlike VW, Fiat Chrysler has steadfastly denied that it knowingly set out to cheat on emissions tests.


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