Fiat Chrysler Puts a Price on Its EcoDiesel Punishment

by Steph Willems

Published: October 30th, 2018

fiat chrysler puts a price on its ecodiesel punishment

With Fiat Chrysler’s third-quarter earnings report, released Tuesday, the automaker showed it could improve on the boosted North American profitability seen under late CEO Sergio Marchionne.

The automaker posted an EBIT (earnings before taxes and interest) profit margin of 10.2 percent in the region, helped by heady Jeep and Ram sales and the 2016 decision to cull its unpopular small cars. That’s up from the record 8.4 percent margins seen in the second quarter of last year, and a 51 percent increase from Q3 2018.

Good times? Overall, yes, but net profit took a hit from last year’s 3.0-liter EcoDiesel saga. FCA expects to pay the federal piper for its undeclared auxiliary emissions control devices, with a dollar figure now attached to its penance.

The Q3 earnings report shows an $812 million charge related “to U.S. diesel emissions matters.” Because of this, FCA’s net profit — $642 million — was less than it could have been. Pre-tax earnings stood at $2.28 billion, a 13 percent increase over the same quarter in 2017.

“This charge does not represent an agreed settlement amount nor an admission of liability, but represents an estimate of the provisions under applicable accounting guidelines based on progress of settlement discussions with counterparties,” the automaker wrote.

FCA never admitted fault for failing to declare its EcoDiesel devices to the Environmental Protection Agency, which came down on its head like a ton of bricks. After issuing a stop-sale order, the EPA forced the automaker to revamp its emissions control system and offer a fix for the 100,000-plus existing owners of 2014-2014 Ram 1500 and Jeep Grand Cherokee models. A new version of the 3.0-liter V6 is expected to appear in 2019.

In April, a lawyer for FCA said a settlement between the automaker and the Department of Justice would likely arrive during the summer. If $812 million is indeed the extent of it, it’s far less than the potential $4.6 billion fine the feds could have handed down.

Elsewhere in the world, FCA’s Asia-Pacific earnings took a hit, mainly because of China’s current economic doldrums. Its not alone in this. Headwinds in Europe, the Middle East, and Africa also dragged the company lower, but pre-tax earnings in Latin America rose 41 percent compared to Q3 2017.

[Source: Automotive News] [Image: Fiat Chrysler Automobiles]

#EcoDiesel #Fca #FiatChryslerAutomobiles #Government #HighFinance

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11 comments

PrincipalDan on Oct 30, 2018

Did the Feds ever establish whether this was "malice" or "stupidity" on FCAs part?

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- DenverMike on Oct 30, 2018
  
  If I recall correct, the trucks were programmed to delay a scheduled "regen" cycle in less than "ideal" conditions, lessening the chances of emissions or engine/turbo failures, with say "too hot" engine temps, too cold ambient (start), driving high speeds or others.
  
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- PrincipalDan on Oct 30, 2018
  
  @DenverMike The last updates I had seen spoke of "undeclared" devices - didn't say whether the trucks were actually non-compliant or just that there were things present that weren't on the EPAs spec sheets.
  
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- Forward_look on Oct 30, 2018
  
  @DenverMike How many polar bears died due to this??
  
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- Highdesertcat on Oct 30, 2018
  
  @forward_look A guy I know had one of these. He only kept it a year, maybe a little more. Now drives a 5.7L 4-door RAM 4x4 Laramie. Like the brand. Loved the ride. Didn’t care much for the smelly little diesel. Ironically, people had warned him against getting one of these pretentious little diesels. That cost him a lot of money in the trade sales transaction. No one wants the damn things back in inventory.
  
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- Carrera on Oct 30, 2018
  
  @highdesertcat They are very hard to find used. I heard they are decent engines and people get very good mileage. 30 mph on the hwy for the red trucks is easy to get. Maintenance is expensive though. It takes a lot of oil and an oil change is well over 100.
  
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- Highdesertcat on Oct 30, 2018
  
  @highdesertcat "They are very hard to find used." Funny you should mention that since his was sold the very same day or the next (he told me). His biggest complaint was that he used it to tow and haul, like he had all his previous RAMs over the past decades. And this little diesel couldn't live up to the promise. A Cummins it's not. Now he's back with the venerable Chrysler 5.7L HEMI and he's a happy camper once again. He did try to get one with the 6.4L but there were none to be had. He bought his Laramie 5.7L at Perkins Motors in Colorado Springs, CO -- no doubt THE BEST dealer in the Great Southwest.
  
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- JohnTaurus on Oct 30, 2018
  
  @highdesertcat Yep, if I were a dealer, I'd sure hate to have a truck spend a maximum of 48 hours on my lot. That's just way too long for a turnover. Just because THE BESTEST DEALER IN THE WORLD hosed him on trade-in doesn't mean it's lot poison.
  
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- Highdesertcat on Oct 31, 2018
  
  @highdesertcat "hosed him on trade-in " I don't know if he got hosed or not, but to some people money is a tool, a means to an end, where getting what you want is more important than having to settle for something. For people who don't finance, they can buy anything they want, as long as they pay for it. And to people who have money, often the cost is less important than the value received. (Here's an example of this eccentric behavior: Why do people plunk down $300K to join a Resort Membership, even if they already own a perfectly good home?)
  
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JohnTaurus on Oct 30, 2018

"[profits] helped by...the 2016 decision to cull its unpopular small cars." This is a recipe for disaster! I will personally stalk every congressional member who even dares to consider giving them billions of my dollars again the very next time they go bankrupt AGAIN! Wait. This is FCA, not Ford. My bad. Carry on.

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- Forward_look on Oct 31, 2018
  
  Well, other states have defense industries to soak up taxpayer dollars to get congressmen reelected. Michigan has the UAW, reliably Democratic ... oh wait.
  
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