Fiat Chrysler Also Has Emissions Issues

Fiat Chrysler Also Has Emissions Issues

Lost amid the intense scrutiny of emissions tests at Volkswagen and Renault is the fact that another European automotive powerhouse, Fiat Chrysler Automobiles, is also in a tight spot with regulators.

Not for possible cheating — far from it. FCA’s problem is that its emissions record in the United States is bad and time to fix it is running short.

For the fourth consecutive year, the maker of Ram pickups and Jeep SUVs finished dead last in a 2014 Environmental Protection Agency ranking of carbon-dioxide emissions among big auto manufacturers. The agency plans to accelerate its CO2 targets sharply beginning next year.

To comply, FCA must improve faster than bigger and richer rivals who also are straining to cut emissions. Failing that, it might be forced to stop building some of the light-duty trucks Bloomberg Intelligence analyst Kevin Tynan says deliver 90 percent of its profit. Or, to keep making them, it could be forced into a merger.

“FCA doesn’t have the resources to fulfill the emissions requirements,” said Maryann Keller, an independent auto industry consultant in Stamford, Conn. “It’s not a company that can survive in its present form.”

To fight global warming, the EPA will cap tailpipe CO2 at 163 grams per mile in 2025. FCA reported an average 428 grams per mile in 2014, compared with 302 for industry-leading Mazda.

The London-based company also faces tougher fuel-economy targets by 2025. The EPA requires automakers to boost average miles per gallon 50 percent to 54.5. Meanwhile, California requires as much as 15 percent of sales come from zero-emission vehicles powered by fuel cells or batteries.

Chief Executive Officer Sergio Marchionne describes these mandates as both expensive and an existential threat. He has been saying since fall 2014 that automakers should face the challenges and boost chronically low profits by merging. General Motors, which he has mainly focused on, said no.

“Nobody needs a merger with Chrysler,” Keller said.

Author: John Lippert And Jeff Plungis Bloomberg News

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