FCA and Renault under investigation for using software to manipulate emissions

January 16, 2017

Whereas the Volkswagen Group has agreed a settlement with US authorities, the Environmental Protection Agency (EPA) has now accused Fiat Chrysler Automobiles (FCA) of using software to manipulate the emissions of diesel engines. In addition, the European Commission is chasing FCA to prove that similar allegations made by the German Federal Office for Motor Vehicles, the Kraftfahrt Bundesamt (KBA), are not true. In a final twist, the prosecutor’s office in Paris is investigating whether Renault also used software to hide excess harmful emissions of nitrogen oxides (NOx). 

The EPA accusation relates specifically to potentially illegal software in three-litre diesel engines used in Dodge Ram pick-up trucks and Jeep Grand Cherokee SUVs between 2014 and 2016. Over 100,000 vehicles are affected. The EPA has already forbidden some of FCA’s 2017 model year engines, although the company was permitted to continue to sell the 2016 versions. As with Volkswagen, it is being investigated whether the software identified test conditions and reduced the NOx emissions, which actually exceed legal limits in real-world driving conditions. As a result of the announcement, FCA shares lost 16% of their value before trading was halted. This comes at an awkward time for FCA as CEO Sergio Marchionne has stated that the chances of the company hitting its 2018 financial targets is ‘significantly greater than 50%.’ Ironically, Marchionne has also suggested that President-elect Donald Trump could be supportive of a merger between FCA and General Motors (GM) and the loss in value of FCA could actually make it more attractive as an acquisition target.   

Back in October, FCA rejected accusations of cheating emissions in Europe. Based on failed emissions tests of FCA vehicles such as the Fiat 500X and Jeep Renegade conducted by the KBA, the German Minister for Transport, Alexander Dobrindt, asked the European Commission to step in as an intermediary. FCA said at the time that their vehicles were tested in Italy and so this was a question for the Italian authorities. Three months on and a spokeswoman for the European Commission has said: ‘We have again asked the Italian authorities to provide convincing answers as soon as possible. We are gradually running out of time because we soon want to conclude discussions about the conformity of Fiat.’ 

After VW, FCA is not the only other car company to be under scrutiny however. Prosecutors in Paris are also investigating whether Renault used software to hide excess harmful emissions in test conditions. This follows the establishment of an expert commission by the French Government in reaction to Renault models such as the Talisman and Captur failing tests by France's Environment Ministry in July 2016. Three judges are reported to be working on the case, reported by Reuters and Agence France Presse. Similar to FCA, Renault’s share price also fell in the day’s trading, albeit by a comparatively low 4%. 

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