Fiat Hit by Emissions Again With U.S. Recall of 863,000 Cars

(Bloomberg) -- Fiat Chrysler Automobiles NV recalled almost 863,000 vehicles that violate U.S. emissions standards, another setback for a company that just agreed in a separate case to make amends for building trucks and SUVs that polluted more than legally allowed.

The voluntary recall of 2011 through 2016 model year Jeep, Dodge and Chrysler brand vehicles will be implemented in phases throughout the year, the U.S. Environmental Protection Agency said Wednesday. The automaker won’t be fined or face allegations of wrongdoing. The cost of the callback was accounted for last year, according to the company.

The recall of gasoline-powered models was prompted by a so-called in-use investigation by EPA as well as testing done by Fiat Chrysler as required by agency rules, the agency said. The EPA routinely tests the emissions of vehicles driven by consumers to ensure that tailpipe emissions remain within legal limits over time.

“EPA will continue to investigate other FCA vehicles which are potentially non-compliant and may become the subject of future recalls,” it said in its statement. Fiat Chrysler shares fell as much as 2.1 percent and closed down 0.9 percent to $14.36 in New York trading.

The Fix

Fiat Chrysler will replace the catalytic converter and update the emissions-calibration software on affected vehicles, and the changes won’t affect fuel economy or performance, said Mark Chernoby, the company’s chief technical compliance officer. He declined to comment on whether any other models were under EPA review. The company’s internal tests showed the excess emissions, and it decided to recall the vehicles last year, he said.

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The California Air Resources Board also was part of the investigation that led to the recall, and roughly 50,000 affected vehicles are in the state, according to the state’s clean-regulator. In California, drivers must complete the recall repairs in order to register their vehicle, the agency said in a statement.

Emissions recalls occur less frequently than safety-related callbacks. Manufacturers conducted 85 emissions recalls covering more than 5.3 million vehicles in 2017, according to the EPA. By contrast, automakers issue hundreds of safety-related recalls annually.

Rarer Recall Type

Emissions recalls are less common in part because catalytic converters have become more durable since the devices first appeared decades ago to lower tailpipe pollution, said John German, an independent auto industry consultant and emissions expert. “It used to be routine,” he said, “but these kinds of emissions recalls are becoming more rare.”

The EPA said the failure targeted by this Fiat Chrysler recall involved the interaction of a number of systems, including the catalyst design itself, as well as engine control system calibration, sulfur in gasoline and other factors. The problem involved performance declines over time and the Fiat Chrysler vehicles were compliant at the time of certification, said agency spokeswoman Molly Block.

“Given the complexity of modern vehicles and the wide range of product offerings in the market, we expect to continue to see some number of catalyst recalls,” Block said. “However, we do not believe that this particular defect is indicative of a broader problem with a particular catalyst supplier or general catalyst design approach.”

The EPA is seeking to give consumers more notice of emissions recalls, with public announcements ahead of formal letters sent to car owners. Block said the new strategy is meant to “increase consumer awareness and make it more likely vehicles are fixed.”

The recall is beginning two months after Fiat Chrysler agreed to pay about $800 million in fines and costs to settle lawsuits brought by states, car owners and the U.S. Justice Department, which said the company’s diesel-powered pickups and SUVs violated clean-air rules. Jeffrey Bossert Clark, assistant attorney general for the Justice Department’s Environment and Natural Resources Division, called the Italian-American company “a multinational corporate bad actor” when the penalties were announced in January.

The settlement didn’t require Fiat Chrysler to admit wrongdoing. The pact also didn’t resolve any potential criminal liability associated with the emissions violations, the Justice Department said at the time. Prosecutors have an ongoing criminal probe of Fiat Chrysler that was opened in 2017, Bloomberg has reported.

The case was the second major action brought by U.S. officials against an automaker for Clean Air Act violations stemming from the discovery that diesel vehicles were rigged to pass emissions tests in labs, even though they spewed nitrogen oxide in excess of permitted levels while on the road.

In January 2017, Volkswagen AG pleaded guilty to criminal charges and agreed to pay some $4.3 billion in U.S. penalties after admitting it deliberately rigged hundreds of thousands of U.S. diesel vehicles.

--With assistance from Jennifer A. Dlouhy.

To contact the reporters on this story: Ryan Beene in Washington at rbeene@bloomberg.net;Gabrielle Coppola in New York at gcoppola@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, ;Jon Morgan at jmorgan97@bloomberg.net, Chester Dawson

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