Volkswagen wrote the script for the current FCA situation as it relates to this week’s recent EPA Diesel Cheating allegations?
As you may know recently the EPA accused FCA, the parent company of Jeep and Ram, of cheating on diesel emissions in just over 100,ooo 2014-2016 model year EcoDiesel equipped Grand Cherokees and Ram 1500 half ton trucks.
According to Reuters, “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.”
This is a very similar accusation to the one that eventually forced Volkswagens CEO Martin Winterkorn to resign as the head of VW. Keep in mind that VW projects that “dieselgate” (as the scandal has come to be known) will cost the company about $20 billion dollars.
It is important to note here that unlike VW, FCA is vigorously denying the accusations. Marchionne has said that regulators have a “belligerent” view of automakers. “We don’t belong to a class of criminals,” he has added. “We’re not trying to break the bloody law.”
In the court of public opinion this may not matter. Car and truck sales are often driven by the buyers perception of the vehicle they are purchasing. Why do you suppose that Subaru sells “love” and “safety” instead cars and crossovers?
This week, in a very odd turn of events, FCA held no press conferences during the 2017 North American International Auto Show’a press days. The company, at least as long as we’ve been going, has always used this premier North American auto show to debut some of their most significant new models. The company and their executives were oddly quiet this week in Detroit during the press days of the show. Could it be that the company and the EPA had worked out a deal to announce the allegations right after the show’s press days when the world’s press had left, literarily left, the building?
At this point, this is just speculation on our part. What isn’t speculation is that yesterday FCA shares plummeted almost 20%, as the company faces $4.6 billion dollars of EPA fines. Combined with the class action lawsuit pending against FCA, this could be why the company was so oddly quiet during the show this week?
How long can FCA CEO Sergio Marchionne survive with both government regulators and legal sharks circling the FCA ship. Let’s face it, the FCA ship has slowly been taking on water since Marchionne took the helm? All you have to do is look at the failed Dodge Dart and Chrysler 200 to see were the water is pouring into the ship.
If we follow the script written by VW’s Dieselgate – the answer is not very long. In the case of VW, numerous high ranking company executives resigned, or were forced to resign, over the last several years including CEO Martin Winterkorn and the head of VW for North America.
Time will tell how Marchionne and FCA will weather this storm. We suspect that if in the coming weeks and months the company sales and stock value declines, it’s just a matter of time before we see a sequel to the VW dieselgate movie that’s been playing for the last two years.
BTW: Back in 2014 Nathan and I went on the press launch of the Ram 1500 EcoDiesel pickup truck. This was before the VW Dieselgate scandal but in case your are curious here’s our review of the truck: