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Analysts wary over FCA lawsuit but say emissions not as bad as VW

MILAN - Any potential fines Fiat Chrysler (FCA) may need to pay to settle a US civil lawsuit over diesel emissions will unlikely top $1 billion, analysts said, adding the case appeared less serious than at larger rival Volkswagen. The US government filed a civil lawsuit on Tuesday accusing FCA of illegally using software to bypass emission controls in 104,000 vehicles sold since 2014, which it said led to higher than allowable levels of nitrogen oxide (NOx) that are blamed for respiratory illnesses. FCA's shares dropped 16 percent in January when the U.S. Environmental Protection Agency (EPA) first raised the accusations, adding the carmaker could face a maximum fine of about $4.6 billion. The stock has been under pressure since. Volkswagen agreed to spend up to $25 billion in the United States to address claims from owners, environmental regulators, U.S. states and dealers. FCA, which sits on net debt of 5.1 billion euros ($5.70 billion), lacks VW's cash pile but analysts said its case looked much less severe. While VW admitted to intentionally cheating, Fiat Chrysler denies any wrongdoing. Authorities will have to prove that FCA's software constitutes a so-called "defeat device" and that it was fitted in the vehicles purposefully to bypass emission controls. Even if found guilty, the number of FCA vehicles targeted by the lawsuit is less than a fifth of those in the VW case. Applying calculations used in the German settlement, analysts estimate potential civil and criminal charges for Fiat Chrysler of around $800 million at most. Barclays has already cut its target price on the stock to take such a figure into account. Analysts also noted that FCA's vehicles are equipped with selective catalytic reduction (SCR) systems for cutting NOx emissions, so it is likely that any problem could be fixed through a software update. "Should this be the case, we estimate a total cost per vehicle of not more than around $100, i.e. around $10 million in aggregate," Evercore ISI analyst George Galliers said in a note. The estimates exclude any additional investments FCA may be asked to make in zero emissions vehicles infrastructure and awareness as was the case with VW. FCA said last week it would update the software in the vehicles in question, hoping it would alleviate the regulators' concern, but analysts said it may have been too little too late. The carmaker is also facing accusations over its diesel emissions in Europe.

Ram introduces 33-mpg Tradesman HFE EcoDiesel

Ram announced Tuesday that its 2021 1500 Tradesman HFE EcoDiesel trim goes toe-to-toe (tow-to-tow?) with the segment's most efficient diesels, offering 23 mpg in the city, 33 mpg on the highway and 26 mpg combined. That's good enough for a first-place tie in the segment, as those numbers now match those of Chevy's Silverado 1500 with the 3.0-liter Duramax oil-burner.  "Ram is committed to innovation and powertrain leadership, and as the no-compromise benchmark for efficiency and performance, we continue to listen to customer input by offering unsurpassed fuel economy," said Ram boss Mike Koval Jr. "The Ram 1500 is America’s most powerful half-ton diesel pickup with 480 lb.-ft. of torque and the most capable light-duty diesel with towing capability up to 12,560 pounds, and delivers up to 1,000 miles of range on a single tank of fuel." From a glance at Ram's specs table, it appears the HFE EcoDiesel configuration (based on a Crew Cab Tradesman with the 5-foot 7-inch bed) is good for 8,210 pounds of trailering and 1,780 lbs of payload. It's worth noting that the Chevy matches the HFE's fuel economy while also providing more towing capability. You can trade the HFE's small fuel economy gain for a bit more towing capability by going to a 3.92:1 rear axle. That will buy you another 1,700 lbs of towing. Even more towing capacity (specifically, the 12,560 lbs maximum quoted above) comes with the Ram 1500 Quad Cab EcoDiesel.  Standard equipment for the HFE includes 20-inch aluminum wheels, a black grille and bumper cover, a tonneau cover, step rails and some perfectly decent cloth seats. The HFE EcoDiesel is available in one of a whopping two finishes: black or white. Exciting. Ram says the HFE will start to appear on dealer lots in the second quarter, and the truck will start at $43,935 (including $1,695 for destination). Related Video:

Stellantis moves to set up its own lending unit

Stellantis is buying Houston-based auto lender First Investors Financial Services Group to set up its own finance arm in the U.S., a move that should support sales and eventually boost profit. The only major traditional automaker in the U.S. without its own finance company agreed to pay $285 million to a group of investors led by Gallatin Point Capital and Jacobs Asset Management, according to a statement. The transaction is expected to close by year-end. Stellantis was formed via the merger between Fiat Chrysler and PSA Group early this year. Carlos Tavares, the PSA boss who became the combined company’s chief executive officer, called the deal to acquire First Investors a milestone that will increase earnings and enhance customer loyalty. “Direct ownership of a finance company in the U.S. is a white-space opportunity which will allow Stellantis to provide our customers and dealers a complete range of financing options,” Tavares said Wednesday in the statement.  Having an in-house finance company has helped rivals General Motors Co. and Ford Motor Co. pad profits, especially during the global semiconductor shortage that has limited production and crimped sales. GM bought subprime lender AmeriCredit Corp. in 2010 and renamed it GM Financial. The operation generated a $2.76 billion profit in the first half -- roughly a third of the companyÂ’s adjusted earnings before interest and taxes. Trouble for Santander? The First Investors acquisition could spell trouble for Chrysler Capital, the operation that Santander Consumer USA Holdings Inc. and Chrysler set up in 2013 before the U.S. automaker completed its merger with Fiat. In a statement, Santander Consumer said itÂ’s committed to supporting Stellantis through the term of their existing agreement and its transition. Santander Consumer will also have “ongoing conversations with Stellantis about long-term mutually beneficial opportunities beyond 2023,” the company said, adding that its consumer business remains strong and has “delivered solid results for our shareholders.” This, along with support from its parent company, will allow the lender to “pursue additional opportunities as they arise.” The lenderÂ’s U.S.-listed stock fell 1.5% in New York trading Wednesday after Bloomberg reported Stellantis was preparing to announce a new finance partner. Stellantis shares rose as much as 1.3% in Paris trading Thursday.