Fiat Chrysler Automobiles has announced closure on a host of penalties and fines that they have to pay to various authorities and state governments in the United States. These are linked to the diesel emissions issue that has plagued Volkswagen group as well as continue to fester for other manufacturers, including FCA.
The concise view of the settlements made with various agencies and arrangements made to address customer vehicle upgrades covers:
- Estimated total cost of settlements is $0.8 billion, in line with financial charge taken for this purpose in third-quarter, 2018
- FCA will provide free software update for an estimated 100,000 vehicles; service provided through an emissions recall and does not require any hardware modification
- Settlements include an average of $2,800 in compensation for each eligible customer affected by the recall
- Civil penalties under the settlement total approximately $400 million, payable to various U.S. federal and state authorities
- FCA maintains its position that the Company did not engage in any deliberate scheme to install defeat devices to cheat emissions tests
- The consent decree and settlement agreements contain no finding or admission with regard to any alleged violations
“We acknowledge that this has created uncertainty for our customers, and we believe this resolution will maintain their trust in us,” said Mark Chernoby, the Company’s Head of North American Safety and Regulatory Compliance, in connection with the last item.
FCA US will conduct an emissions recall to update emission control software in an estimated 100,000 model-year 2014-2016 Ram 1500 pickups and Jeep Grand Cherokee SUVs equipped with 3.0-liter EcoDiesel V-6 engines. The software reflash does not affect average fuel economy, drivability, durability or refinement of the vehicles.
Each current and former owner and lessee of these vehicles will be eligible to receive a payment averaging $2,800 as part of the plaintiff steering committee settlement. The affected vehicles will also qualify for an extended warranty in connection with the software update.
“We have implemented rigorous new validation procedures and updated our training programs to ensure continued compliance with the increasingly complex regulatory environment,” Chernoby said. “Such measures are consistent with our mission to deliver advanced technologies that deliver value to our customers and that enhance the environmental performance of our products.”
The settlements are now lodged with the San Francisco division of the United States District Court, North District of California, where they await judicial approval. The approximately $400 million in civil penalties includes:
- $305 million payable to the U.S. Environmental Protection Agency (EPA), U.S. Department of Justice (DOJ) and the California Air Resources Board (CARB) for environmental claims
- $13.5 million to the California Attorney General for consumer claims and mitigation expenses
- $72.5 million to various other state attorneys general for environmental and consumer claims
- $6 million to Customs and Border Protection
In addition to these a sum of 19 million dollars goes to the State of California for emissions mitigation initiatives, while also financing the upgrade of 200,000 high-efficiency catalytic converters through the aftermarket.