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Fiat Chrysler (FCAU) Charged for Excess Diesel Emission

Zacks Equity Research

Fiat Chrysler Automobiles N.V. FCAU stated that it has been charged by U.S. federal and state authorities, including the Securities and Exchange Commission for excess diesel emissions by some of its vehicles. The automaker has received many inquiries, summons and requests regarding the issue. Additionally, several State authorities are also investigating the issue.

Last month, the U.S. Environmental Protection Agency (“EPA”) had charged Fiat Chrysler for illegally using software to modify the emission levels from the diesel-powered Jeep Grand Cherokee SUVs and Ram pickups. According to EPA findings around 104,000 vehicles had software which did not properly reveal the emission of nitrogen oxides. Notably, avoiding the disclosure of software which affects the emissions is violation of law. According to EPA, Fiat Chrysler may be charged with a fine of $4.6 billion.

However, Fiat Chrysler has denied the claim. Moreover, the company confirmed that it is taking care of the matter and will cooperate with all the government requests. The company is also undergoing several other civil lawsuits.

Fiat Chrysler Automobiles N.V. Price

Fiat Chrysler Automobiles N.V. Price | Fiat Chrysler Automobiles N.V. Quote

In 2016, Volkswagen AG VLKAY faced significant trouble since EPA revealed that the company had developed a software algorithm to deceive U.S. emission tests. Volkswagen admitted that its diesel vehicles are installed with software that makes the engines appear to have low emission levels during tests.

According to the EPA, these vehicles emit nitrogen oxides, or NOx, at almost 40 times the standard amount. Nitrogen oxide emissions lead to smog and acid rain, and can cause serious health concerns like lung cancer.

Price Performance

The performance of Fiat’s shares has been stronger than the Zacks categorized Auto Manufacturers-Foreign industry in the last three months. The company’s shares have rallied 43.7%, while the industry has lost 0.5%. The performance of the company’s shares has been supported by strong sales recorded in the U.S and Europe in 2016.

Zacks Rank & Other Key Picks

Fiat Chrysler currently carries a Zacks Rank #1 (Strong Buy).

Other favorably placed companies in the auto space include American Axle & Manufacturing Holdings, Inc. AXL and General Motors Company GM. Both the three stocks sport a the same Zacks Rank as Fiat Chrysler. You can see the complete list of today’s Zacks #1 Rank stocks here.

For the current year, Lear Corporation, American Axle and General Motors expect earnings growth of around 8.9%, 8.1% and 9.4%, respectively.

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