Stellantis sentenced for cheating on diesel emissions in jeeps and rams
Toyota’s commercial truck business and Stellantis are under fire for cheating on emissions controls like it’s 2015 again, Ferrari’s order books are breaking records, and Renault will follow its heart, with or without its so-called “Alliance” partners. All this and more in The morning shift for Tuesday, August 2, 2022.
1st Gear: officially a conspiracy
OK, so the roughly $800 million that Stellantis had to shell out as a result of cheating federal emissions testing on Jeep and Ram diesel models is a drop in the bucket compared to, say, the $30 billion that Dieselgate has cost Volkswagen. However, Stellantis has taken the advocacy market in the criminal case in June, agreeing to pay $300 million in fines.
On Monday, the US arm of the company – which was formerly FCA US – was finally convicted of conspiracy to defraud the United States, committing wire fraud and violating the Clean Air Act. Of Reuterms:
The company had been accused of making false claims about diesel emissions in more than 100,000 2014-2016 U.S. Jeep Grand Cherokee and Ram 1500 diesel vehicles.
The Justice Department said the FCA conspired to cheat US emissions testing.
The $300 million criminal penalty “is the result of an exhaustive three-year investigation,” Assistant Attorney General Todd Kim said. “This resolution shows the Department of Justice is committed to holding wrongdoing companies accountable to misleading regulators.”
The government noted that FCA US had already paid a $311 million civil penalty and more than $183 million in compensation to more than 63,000 people in a diesel class action lawsuit.
The automaker must conduct an initial review of its compliance with the Clean Air Act and inspection and testing procedures, submit a report, and prepare at least two follow-up reports. Reuters first reported the expected settlement in May.
The Department of Justice said FCA US installed deceptive software features intended to avoid regulatory scrutiny and fraudulently help diesel vehicles meet required emissions standards.
Additionally, three FCA employees – Sergio Pasini, Gianluca Sabbioni and Emanuele Palma – will be tried on the same charges. A Stellantis spokesperson told the Detroit Free Press that the complaints “related to the vehicles in question have already been resolved” and that there are no outstanding recalls. Just over 100,000 vehicles, from model years 2014 to 2016, were affected by this investigation.
2nd gear: And now Toyota
Meanwhile Hino, Toyota’s commercial truck subsidiary, has been cheating its own emissions tests since 2003. When the company first “admitted” wrongdoing in March, it said it falsified data dating back only to 2016. An independent investigation commissioned by the manufacturer found otherwise, exposing a culture where engineers were threatened with not speaking up, and, obviously, no one outside of the company’s powertrain department was aware of what was happening. Still, Reuters:
The board of inquiry commissioned by truck and bus maker Hino Motors Ltd blamed the scandal on an environment where engineers felt unable to challenge their superiors, in a rare critique of corporate culture in Japan .
The committee, made up of lawyers and a corporate adviser, was set up by Hino this year after it admitted falsifying emissions and fuel performance data for four engines. Its findings, released on Tuesday, detail an inflexible atmosphere where it was difficult for staff to feel “psychologically safe”, the committee said in a report.
A sense of past success on the part of management helped engender the culture, said committee chairman Kazuo Sakakibara, who was the former chief prosecutor of the Osaka District Prosecutor’s Office.
“The magnitude of their past successes made them unable to change or look at themselves objectively, and they were unaware of changes in the external environment and values,” he said during a briefing.
“The organization has become disorganized where people are unable to say what they cannot do.”
Hino Chairman Satoshi Ogiso apologized to reporters and said management takes its responsibilities seriously. He said he received a message from Toyota Chairman Akio Toyoda who said the misconduct at Hino had betrayed the trust of all stakeholders.
To date, Hino has already recalled 67,000 probe-related vehicles, according to the Seattle Times. Now the company estimates the true total could be as high as 300,000.
3rd gear: Ferrari!
They’re doing something in Maranello, as the company just raised its full-year guidance after a particularly strong second quarter that saw a record number of orders. Take it off again, Reuters:
The company said it now expects adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of between 1.70 billion and 1.73 billion euros this year, down from a previous guidance range of 1. .65 to 1.70 billion euros.
“The quality of the first six months and the robustness of our activity allow us to revise upwards the 2022 forecasts on all indicators,” Chief Executive Benedetto Vigna said in a statement.
“In addition, net order intake reached a new record high in the (second) quarter,” added Vigna, who took over as Ferrari helm last September.
Adjusted EBITDA rose 15% in the April-June period to 446 million euros ($456 million), beating analysts’ expectations of 427 million euros, according to a Reuters poll.
Shipments increased 4% in the quarter, with deliveries more than doubling in China to 358 units.
Much of it was led by the Portofino M and F8, although hybrid models like the new 296 GTB and SF90 certainly contributed, accounting for 17% of the company’s second quarter shipments.
4th gear: what you say to your “allies”
Renault wants to split its ICE and battery-electric automobile activities, and, frankly, no matter what Nissan and Mitsubishi think, or want to contribute to the plan. Of Automotive News:
“They know we have to do it, we will do it and we have opened the door to them on every project,” said Renault chief executive Luca de Meo.
“In the end, it’s up to them whether they want to jump in, but the train is leaving the station,” de Meo said.
De Meo’s plan to split the automaker’s operations is gaining momentum after talks began with French unions and talks began with the management of its alliance partners Nissan and Mitsubishi Motors.
De Meo said he would disclose details of the transformation plan in the fall after “transparent” discussions with Japanese companies.
Hundreds of people are working on projects that can go beyond creating an EV operation and could include other partners, he said in the interview.
De Meo says Renault’s board shares a “very good” relationship with Nissan and Mitsubishi senior management, even as Renault and Nissan appear to have emotionally withdrawn from the union, and are do their best to check financially too. With everything that has happened to these companies over the past three years, it was all almost inevitable.
5th Gear: GAC has a message for Jeep
Last week we learned that Stellantis was planning to close its only factory in China, ending a partnership between the state-backed Guangzhou Automobile Group and Jeep. The poor performance of the foreign brand market lately probably also contributed to the decision. Now GAC has fought back, and wouldn’t you know he has some choice words for Stellantis CEO Carlos Tavares. Still, Automotive News:
Guangzhou Automobile Group said Friday that Stellantis CEO Carlos Tavares’ comments on the breach of trust between the two companies over their Chinese manufacturing partnership were “incredible”.
Several Stellantis companies “have failed, which is the result of a lack of respect for customers in the Chinese automotive market,” GAC Group said in a statement.
The latest twist in the months-long back-and-forth comes after Tavares on Thursday during earnings presentations and an interview with Bloomberg Television flagged the growing risks of China operating factories because its politicians are increasingly meddling with business.
The joint venture “has been unable to establish a mutually reliable operating mechanism suitable for the highly competitive environment in China to reverse the unfavorable situation of continuous losses in recent years,” GAC Group said.
It’s not the end of Jeep in China, but none of the brand’s future models will be produced inside the country; they will be exported there.
Reverse: This XJ
On this day in 2005, Jaguar announced the Daimler Super Eight, a car I had never heard of until today. For the record, this Daimler is British and unrelated to Daimler-Benz, and used to attribute its name to fancier Jaguars. 365 days of driving tells us that this one had a TV tuner!
Neutral: I’m next
So I’m working from my apartment, and my establishment notified me and all of my roommates late last week that they would be testing fire alarms from 8am (come on!) yesterday and today. As I type this, I hear alarms sounding in the adjacent building. My heart races and the hair on my neck stands on end, knowing that at any moment I might be startled by the loudest, most piercing noise, in which case my soul will leave my body. I should really jump for a helmet and blow something up.