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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.

Chrysler officially rebrands as FCA US LLC

Detroit's third-largest automaker has had a lot of names over the years. It was founded as the Chrysler Corporation in 1925, a name it held until 1998 when it was bought by ze Germans in 1998 to form DaimlerChrysler AG, then it went independent in 2007 under the name Chrysler LLC before being retitled once again as Chrysler Group LLC in 2009. And now the automaker headquartered in Auburn Hills, MI, is getting yet another new name. Announced today and effective immediately, the company formerly known as Chrysler will now be called FCA US LLC. That's a lot of letters, but they make a lot of sense, too: FCA stands for Fiat Chrysler Automobiles, the US telling us this is the company's American division and the LLC tells us it's a limited liability company – a legal classification similar to (but not quite the same as) a corporation. The announcement comes shortly after the company decided to phase out its long-serving Pentastar logo. The sum total is that the once-independent industrial giant is now formally part of a larger European parent company, owned by Fiat and (for taxation purposes, anyway) based in the Netherlands. What the company formerly known as Chrysler wants to emphasize, however, is that FCA US LLC will remain based in Auburn Hills and retain its "holdings, management team, board [and] brands." Chrysler Group LLC Announces New Company Name: FCA US LLC U.S.-based Automaker's New Name Aligns With Global Parent December 16, 2014 , Auburn Hills, Mich. - Chrysler Group LLC, the Auburn Hills, Michigan-based automaker, today announced that it has changed its company name to FCA US LLC. The name change is effective immediately and follows the naming convention of its global parent company, Fiat Chrysler Automobiles N.V. (FCA), which officially adopted its new name in October when it listed on the New York Stock Exchange. The name change to FCA US LLC does not affect the company's headquarters location in Auburn Hills, Michigan, its holdings, management team, board or brands. FCA US, together with parent FCA, continues to work toward the business plan presented on Investor Day in May 2014. Additionally, the Company remains proud of its joint heritage. FCA US continues to build upon the solid foundations first established by Walter P. Chrysler in 1925 as well as a rich Fiat heritage that dates from 1899. FCA US employs more than 77,000 employees worldwide, with 96 percent of its workforce based in North America.

Italian government to lean on Fiat's Marchionne to commit to country

With the recent chatter that Fiat is looking to move its global headquarters to the US following a complete merger with Chrysler, the Italian government is voicing its opinion on the matter. Facing the potential job loss from the automaker leaving the country, Italy's industry minister is meeting with Fiat CEO Sergio Marchionne in what will likely be a plea to keep the company based in Turin rather than moving to Auburn Hills, MI - if indeed it is able to acquire the additional 41.5 percent of Chrysler currently owned by the United Auto Workers.
According to Bloomberg, Fiat is Italy's biggest private employer and unemployment is already nearing a 20-year high. The non-car side of Fiat, Fiat Industrial, is already planning a move to the UK, so it goes without saying that Fiat moving would be a pretty big blow for the Italian economy. In the article, Fiat says that the headquarters issue is "not on its agenda now," but that statement is far from a denial.