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Fiat Chrysler faces $79 million U.S. penalty for fuel economy shortfall

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Via Reuters Finance

WASHINGTON (Reuters) – Fiat Chrysler Automobiles NV (FCHA.MI) on Wednesday said it faces a $79 million U.S. civil penalty for failing to meet 2017 fuel economy requirements, as regulators reported more automakers were falling short of U.S. greenhouse gas emissions standards.

A Fiat Chrysler Automobiles (FCA) sign is seen at its U.S. headquarters in Auburn Hills, Michigan, U.S. May 25, 2018. REUTERS/Rebecca Cook

The Italian-American automaker said the payment is not expected to have a material impact on its business.

Of 18 major carmakers in the United States, 13 including Fiat Chrysler, failed to comply with fuel economy and greenhouse gas emissions standards for the 2017 model year without using credits, according to the National Highway Traffic Safety Administration (NHTSA).

The agency said its review of model year 2017 vehicles showed “automakers falling further behind current standards.”

The 2017 model fleet fell 1-1/2 miles per gallon short of the 33.8 mpg standard based on yearly performance without including credits, NHTSA reported. The shortfall was 1/2 mile per gallon for the 2016 model year.

NHTSA said more automakers were failing to comply with standards for the 2018 and 2019 model years, “and the potential penalties on automakers, which are passed along to consumers, are expected to continue to increase.”

The Trump administration has used the widening gap between the emissions of automakers’ U.S. fleets, which are skewing toward larger vehicles, and national vehicle CO2 emissions standards to bolster its case for freezing vehicle emissions and mileage standards at current levels through 2026.

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Environmental groups and regulators in California and other states are fighting against any rollback in standards, saying tough rules are needed to address climate change and reduce consumer outlays for fuel.

NHTSA and the Environmental Protection Agency are working to finalize as early as next month a rewrite of the Obama administration’s fuel efficiency requirements, which call for sharp reductions in fleet-wide emissions by 2026.

Fiat Chrysler is paying fines for the shortfall in its domestic passenger car fleet, which includes several front-wheel Jeep and Dodge two-wheel drive SUVs and some sedans and muscle-cars. The automaker killed its slow-selling domestic small and midsize sedans.

After paying $77.3 million last year for a 2016 model year fuel-economy shortfall, a Fiat Chrysler spokesman confirmed Wednesday the company had received a letter on the 2017 penalty and has 60 days to pay the fine.

In its report, NHTSA said Fiat Chrysler – which reiterated plans Wednesday to spend $10 billion through 2022 to develop more than 30 hybrid and electric vehicles – had failed to meet the 2017 minimum “domestic passenger car” requirements.

The company said it “continues to support and deliver year-over-year fuel-economy improvements.”

The Alliance of Automobile Manufacturers, a trade group representing General Motors Co (GM.N), Volkswagen AG (VOWG_p.DE), Toyota Motor Corp (7203.T) and others, said NHTSA’s “report shows continued progress and higher fuel economy across the entire fleet, but it also shows the continued gap between the standards and the market.

“The Alliance continues to advocate for increased standards that are attainable and reflect marketplace realities,” the lobbying group said in a statement.

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The Trump administration gave automakers another respite on fuel economy in July, when it cancelled a rule that would have more than doubled penalties for automakers failing to meet fuel efficiency requirements.

Automakers protested the hike, saying it could increase industry compliance costs by $1 billion annually.

Obama-era rules call for a fleetwide fuel-efficiency average of 46.7 miles per gallon by 2026. That compares with 37 mpg under the Trump administration’s preferred option.

Reporting by David ShepardsonEditing by Nick Zieminski and Tom Brown


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