What does The Donald think about FCA and the EPA's diesel fraud charge?

Jamie Lincoln Kitman

Jamie Lincoln Kitman | Jan 13, 2017

In the days leading up to the zircon-encrusted coronation and kickoff of the Trumpazoic Era, few things have appeared more unseemly than the sight of once arrogant automobile corporations bowing and scraping before the incoming president. It's quite different than the enforced bout of humble obsequiousness two American makers (GM and Chrysler, now FCA) found themselves stricken with on the eve of their 2008-2009 federal bailouts. But the change is not surprising. Because now the car companies are trying to curry favor with someone whom they think is nuts but one who might help them anyway in the narrow, self-interested ways that they care about; that is, a president who supports their retrograde views on emissions, safety and corporate legal liability generally. In Trump, they know they're dealing with someone whom is clearly bromanceable and receptive to flattery, no matter how shameless or self-serving.

So it was yesterday, when FCA was charged by the EPA with using cheater software on 104,000 of its 3.0-liter V6 diesel engines as featured in Jeep and Ram vehicles, causing excessive, illegal emissions of NOx, a charge the company denies. They took it right to the Trump hoop, too, for in Trump They Trust. And why not, given the anti-regulatory tone of the president-elect's campaign and his proposed EPA administrator, avowed pollution enthusiast and EPA hater Scott Pruitt?

"Still, FCA's official response scans better when you imagine them doffing their feathered hats and kneeling on one knee in the court of the crimson king."

Still, FCA's official response scans better when you imagine them doffing their feathered hats and kneeling on one knee in the court of the crimson king: "FCA US intends to work with the incoming administration to present its case and resolve this matter fairly and equitably and to assure the EPA and FCA US customers that the company's diesel-powered vehicles meet all applicable regulatory requirements." In case you were wondering, when you deny the charge completely, "fairly and equitably" means getting the case dropped and having the EPA (whose decisions to prosecute, though science-based, are very much political, hence the timing on this one) send you home with a pat on the back.

FCA boss Sergio Marchionne has sent love notes to Trump of late, suggesting just this week that the Donald would see the wisdom (presumably because he's so smart) in GM merging with FCA, something the car boss has been pushing for a while. Earlier, Trump had praised FCA's (already planned) decision to invest $1 billion in an Ohio plant, erroneously taking credit for it, while causing FCA's shares to rise – a pleasant change from the nasty things he'd been tweeting about Ford and Toyota, who've since made a point of kissing the new emperor's ring heartily. In fact, FCA's shares have risen 75% since Trump's election on the hope that he will somehow plow through the myriad objections of unions, antitrust regulators and even General Motors itself to the merger plan Marchionne is desperate to realize. It is based, in part, on the fact that FCA doesn't build competitive cars anymore, with Jeeps and Ram trucks providing the lion's share of its profit. Jeep, at least, would clip on pretty easily with GM, now that Hummer is gone, but moribund Fiat, Chrysler, Dodge and tiny Alfa Romeo … well, as GM has concluded, a merger makes more sense for FCA than GM.

FCA, then, is in bad shape. And any multi-billion-dollar EPA penalties it may face could prove near fatal at a time when money is tight – thanks to money-losing car operations – even while it earns record profits selling SUVs and trucks. A single downturn in the market could put it under. This, one can't help thinking, puts additional pressure on Trump to settle the suit in FCA's favor quickly. The bankruptcy of the company that builds essential American brands like Jeep won't make it look like they're making America great again. And what's a few cancer deaths anyway?

Poor Volkswagen, already $20 billion and counting into settled criminal charges and consumer buyouts, will cry murder in the case of a Trumpian get out of jail free pass, as well they might. They may continue crying when news comes out, as it inevitably will, that VW and FCA weren't the only cheaters, and when these other manufacturers learn that the EPA is no longer the enemy of cheaters and polluters, and skate.

Everybody gets one of these, except VW. 

Indeed, the cause of clean air and justice will then have to look abroad. Germany's motor vehicle authority, the KBA, has already accused FCA of irregularities involving emissions of European diesel versions of the Fiat 500X, Fiat Doblo and Jeep Renegade models. Just like with Volkswagen, the FCA products are alleged to recognize when they are in test mode and curb emissions to legal limits only then. In Europe, individual nations are responsible for certifying models made on their soil, so the Germans have filed a complaint with the EU that would require Italy, which certified these cars and denies the allegation, to prove it. So far, crickets. Reminding us of one of the dangers of letting government do industry's bidding.

But say the worst happens and FCA are exposed as cheaters? With FCA's finances shaky enough as it is, you have to ask, are we really ready to go through a third taxpayer-funded bailout of the former Chrysler corporation? Stripped for its most valuable assets – Jeep and Ram pickups – it's guaranteed to be worth something to someone. But if you had to guess, the Trump Way could well start with a tweet calling on GM to buy the company.  

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