Dark clouds gather over Fiat Chrysler Automobiles in America. Documents show according to Reuters that the car manufacturer is taking into account a total settlement of 722 million euros with the US Justice Department. This amount is attributable to more stringent penalties for violating the Corporate Average Fuel Economy and tampering with diesel emissions.
The Corporate Average Fuel Economy (CAFE) in America is what is the CO2 standard for us in Europe. Across the ocean, a manufacturer’s fleet is tested on average fuel consumption. If this value is too high, there will be a fine. The National Highway Traffic Safety Administration (NHTSA) wants to make those fines tougher, something the Trump administration stopped in July 2019. However, the U.S. court of appeal overturned that decision. As a result, higher fines still threaten for car manufacturers in America. In the financial document, FCA states that the fine can amount to 500 million euros converted. Apart from this amount, FCA is currently negotiating a settlement of 222 million euros with the American justice for diesel fraud.
The damage for FCA in America may therefore amount to 722 million euros, depending on how high the final fine for exceeding the CAFE will be. It would mean that the profits that the group has recently made evaporate again immediately. In January 2019, FCA already reached a settlement of 684 million euros with the California Air Resources Board and owners following fraud involving diesel emissions. In addition, a fine of 8.1 million euros was paid in September for misleading investors.
All in all, it seems to be raining fines at FCA. It is hoped for the group that the merger with PSA in Stellantis can lead to a positive turnaround in this. In particular, PSA’s e-CMP platform should contribute to the expansion of the electrical offering in FCA’s current portfolio.