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FCA paying for VW-Audi crimes

by David Zatz on

Volkswagen-Audi Group deliberately altered their engine computers to detect and work around government tests in Europe, the United States, and likely other parts of the world. Now, FCA is paying in two ways.

First, analysts appear to believe that diesel demand as a whole will fall, and Fiat excels in diesel engines, to the point that Suzuki, which is popular in India, uses their engines. As noted earlier, FCAU — Fiat Chrysler stock — fell when the Volkswagen-Audi scandal made it to the front page, and has not yet recovered.

(Note: Fiat Chrysler’s stock was also impacted by analysts’ opinions that a merger with General Motors in increasingly unlikely. FCAU shares have dropped 14% since September 17 and 22% since their all-time high in early April.)

Second, FCA’s costs — along with those of all other automakers — will increase somewhat, as the United States government has already announced it is changing the way it tests emissions, to avoid criminal evasion of the rules.  The EPA is doing more spot checks, which may result in the need to re-run tests or add more of a margin to emissions reductions; it also means that automakers will have to give cars to the EPA for a longer period, which may delay launches somewhat. (That time may be helpful for FCA, though, if it increases the company’s internal testing time as well.)

The EPA is also reportedly considering expanding its use of on-road testing, which currently is only used for areas where automakers have cheated in the past, according to the Associated Press.

Volkswagen’s case is different from GM and FCA, as noted earlier, partly because the company pro-actively set out to break the law in at least two regions, whereas GM did a coverup of an error (while fixing the part in question) and FCA was, apparently, complacent about customers’ responses to recalls and sloppy in its administration. FCA in particular does not appear to have set out to intentionally break the law.

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