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Fiat Chrysler shares crash on fears of 'dieselgate' court battle

Fiat Chrysler shares crash on fears of 'dieselgate' court battle
Published by
The Telegraph

2m read

19 May 9.04am

Hargreaves Lansdown is not responsible for this article's content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Article originally published by The Telegraph.

Fiat Chrysler shares have crashed on fears the car maker is about to be sued in the US over its alleged use of “dieselgate”-style defeat devices.

Shares in the company, which also owns the Alfa Romeo, Dodge and Jeep marques, dropped 7pc in early trading following reports the US Justice Department is preparing a case against it that could leave it facing multi-billion dollar penalties.

It is reported that Fiat Chrysler Automobiles (FCA) fitted some of its diesel-powered cars with software that disables pollution control systems during normal driving but switches them on during tests so they are able to meet required emissions standards.

This means that during on-the-road driving the cars pump out more pollution than the officially stated levels.

Fiat Chrysler Automobiles NV
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Volkswagen Ag
€136.9 -0.65%

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In 2015 Volkswagen admitted fitting 11m cars worldwide with defeat devices. The ensuing scandal knocked billions off the car maker’s market value and it has since agreed to pay tens of billions of dollars in penalties and compensation in the US, where the company’s deceit was first uncovered.

FCA has said its software was not intended to dodge pollution controls in the same way as that of VW, but US investigators have so far failed to be convinced about its purpose.

The car maker and US Department of Justice are reported to be in negotiations to try to avoid a legal battle, the prospect of which wiped almost €1bn (£850m) off FCA’s market value, taking it down to €14.6bn.

FCA is preparing to defend separate claims from the US Environmental Protection Agency that the company sold more than 100,000 Jeep Grand Cherokee SUVs and Ram 1500 pick-ups that were fitted with defeat devices.

If FCA is found to have flouted rules over pollution, it could face fines for each affected vehicle, up to a total maximum penalty of $4.6bn (£3.5bn).

Sergio Marchionne, head of FCA, has denied the company used similar systems to VW, repeating an assertion at FCA’s annual results in January, though he admitted that it may have made mistakes in informing authorities about the uses of engine control systems.

The news came as Britain’s used car sector reported record sales in the first quarter of the year, with 2,133,956 second-hand cars changing hands.

The figure - up 3.4pc on the same period last year - includes private sales as well as those through dealers, and is collated by examining official Driver & Vehicle Licensing Agency data.

This article was written by Industry Editor and Alan Tovey from The Telegraph and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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  • 19 May 9.04am
  • 2m read

  • AAA

Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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