Chrysler's $810 Million Charge Signals Progress in Diesel Talks
(Bloomberg) -- Fiat Chrysler Automobiles NV said Tuesday it will set aside 713 million euros ($810 million) to cover costs stemming from U.S. allegations it sold diesel vehicles that violated clean-air rules, in a sign the company sees a settlement costing less than analysts expected.
In a call with analysts, Fiat Chrysler Chief Financial Officer Richard Palmer said the provision would cover potential fines, remedies and settlements of lawsuits related to the alleged diesel violations. Analysts had expected a charge of more than 1 billion euros.
“This does not represent the settlement outcome or any admission on our part,” CEO Mike Manley said on the call. “Given the progress of discussions on these matters, we thought it was appropriate under our accounting rules to record this charge at this time.”
The disclosure comes as talks to resolve lawsuits tied to the allegations are entering a more advanced stage, according to Kenneth Feinberg, the court-appointed settlement master steering talks between the company, state and federal officials and drivers.
“The settlement negotiations are going forward, they are intensifying during the month of November,” Feinberg said. “Chrysler is negotiating in good faith with all the various parties that have an interest in this,” including federal and state officials, and drivers who’ve sued the company over the diesel issues.
The U.S. Environmental Protection Agency and California Air Resources Board in January 2017 alleged that the automaker equipped diesel-powered pickups and SUVs with emissions software that violated clean-air laws.
The Justice Department then sued the automaker in May 2017, alleging that 2014 to 2016 model year Jeep Grand Cherokee SUVs and Ram 1500 pickups had diesel engines rigged with illegal software to mask true pollution levels in lab tests while exceeding legal limits in real-world driving. The allegations were similar to claims made against Volkswagen AG in 2015.
Unlike VW, Fiat Chrysler has denied intentional wrongdoing.
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