Toyota’s commercial truck business and Stellantis are under fire for cheating emissions controls like it’s 2015 again, Ferrari’s order books are breaking records, and Renault will follow its heart, with or without its so-called “alliance” partners. All that and more in The morning shift for Tuesday, August 2, 2022.
1st Gear: Officially a conspiracy
OK, so the roughly $800 million Stellantis has had to pay out as a result of cheating on federal emissions tests on Jeep and Ram diesel models is a drop in the bucket compared to, say, the $30 billion Dieselgate has cost Volkswagen. Still, Stellantis took the appeal in the criminal case in June and agreed to pay a $300 million fine.
On Monday, the US arm of the company – what used to be FCA US – was finally convicted of conspiracy to defraud the US, commit wire fraud and violate the Clean Air Act. From Retues:
The company had been accused of making false claims about diesel emissions in more than 100,000 US 2014-2016 Jeep Grand Cherokee and Ram 1500 diesel vehicles.
The Justice Department said FCA had conspired to cheat US emissions tests.
The $300 million criminal penalty “is the result of an exhaustive three-year investigation,” said Assistant Attorney General Todd Kim. “This resolution demonstrates the Department of Justice’s determination to hold corporate criminals accountable for misleading regulators.”
The government noted that FCA USA had previously paid a $311 million civil penalty and more than $183 million in restitution to more than 63,000 people as part of a diesel class action lawsuit.
The automaker must conduct an initial review of its compliance with the Clean Air Act and inspection and testing procedures, submit a report, and prepare at least two follow-up reports. Reuters first reported the planned settlement in May.
The Justice Department said FCA USA installed deceptive software features intended to avoid regulatory review and fraudulently help diesel vehicles meet required emissions standards.
In addition, three FCA employees – Sergio Pasini, Gianluca Sabbioni and Emanuele Palma – will stand trial on the same charges. A spokesperson for Stellantis said Detroit Free Press that claims “related to the affected vehicles have already been resolved,” and there are no outstanding recalls. Just over 100,000 vehicles, from model year 2014 to 2016, were involved in this investigation.
2nd gear: And now Toyota
Meanwhile, Hino, Toyota’s commercial truck subsidiary, has been cheating its own emissions tests since 2003. When the company first “admitted” error back in March it said it had falsified data that only went back as far as 2016. An independent investigation commissioned by the manufacturer has indicated otherwise, revealing a culture where engineers were threatened not to resign, and, apparently, no one outside the company’s powertrain department was aware of what was going on. Again, Reuters:
The investigative committee commissioned by truck and bus maker Hino Motors Ltd blamed the scandal on an environment where engineers did not feel able to challenge superiors, in a rare criticism of corporate culture in Japan.
The committee, made up of lawyers and a corporate adviser, was set up by Hino this year after it admitted to falsifying data related to emissions and fuel performance for four engines. Its findings, released on Tuesday, describe an inflexible atmosphere where it was difficult for staff to feel “psychological safety”, the committee said in a report.
A sense of past success on the part of management helped create the culture, said committee chairman Kazuo Sakakibara, who was the former chief prosecutor at the Osaka District Attorney’s Office.
“The extent of their past success has made them unable to change or look objectively at themselves, and they have been oblivious to changes in the external environment and values,” he told a briefing.
“The organization has become a poorly organized one where people cannot say what they cannot do.”
Hino’s president, Satoshi Ogiso, apologized to reporters and said management took its responsibility seriously. He said he had received a message from Toyota’s president, Akio Toyoda, who said the misconduct at Hino betrayed the trust of all stakeholders.
To date, Hino has already recalled 67,000 vehicles related to the probe, per Seattle Times. Now the company estimates that the real total could be as high as 300,000.
3rd Gear: Ferrari!
They’re doing something right in Maranello, as the company has just raised its full-year forecast after a particularly strong second quarter with record orders. Remove it again, Reuters:
The company said it now expects adjusted earnings before interest, tax, depreciation and amortization (EBITDA) between 1.70 billion euros and 1.73 billion euros this year, up from a previous forecast range of 1.65-1.70 billion Euro.
“The quality of the first six months and the robustness of our business allow us to revise up the 2022 guidance for all metrics,” CEO Benedetto Vigna said in a statement.
“Net order intake also reached a new record level in the (second) quarter,” added Vigna, who took over Ferrari last September.
Adjusted EBITDA rose 15% in the April-June period to 446 million euros ($456 million), beating analyst expectations of 427 million euros, according to a Reuters poll.
Shipments increased 4% in the quarter, and shipments more than doubled in China to 358 units.
Much of this was powered by the Portofino M and F8, although hybrid models such as the new 296 GTB and SF90 certainly contributed, accounting for 17 percent of the company’s second-quarter deliveries.
4th gear: things you say to your “allies”
Renault wants to split its ICE and battery-powered car businesses, and, honestly, it doesn’t care what Nissan and Mitsubishi are considering, or whether they want to contribute to the plan. From Car news:
“They know we have to do it, that we will do it and we have opened the door to them on every project,” Renault CEO Luca de Meo said.
“At the end, it’s their decision if they want to jump in the boat, but the train is leaving the station,” de Meo said.
De Meo’s plan to split the carmaker’s operations has gained traction after talks with French unions opened and discussions also opened with the top management of its alliance partners Nissan and Mitsubishi Motors.
De Meo has said he will reveal details of the transformative plan in the autumn after “transparent” discussions with the Japanese companies.
Hundreds of people are working on projects that could go beyond spinning off an electric car operation and could include other partners, he said in the interview.
De Meo says Renault’s boardroom shares “very good” relations with Nissan and Mitsubishi’s top management, even as Renault and Nissan appear to have emotionally checked out of this union and are do your best to check it out financially as well. With everything that has happened to these companies over the past three years, this was all pretty much inevitable.
5th Gear: GAC has a message for Jeep
Last week we learned that Stellantis planned to do so close its lone factory in China, ending a partnership between state-backed Guangzhou Automobile Group and Jeep. Poor market development for foreign brands in recent times has probably also contributed to the decision. Now GAC has fired back, and wouldn’t you know it has some choice words for Stellanti CEO Carlos Tavares. Again, Car news:
Guangzhou Automobile Group said on Friday that comments made the day before by Stellanti chief executive Carlos Tavares about how trust had been broken between the two companies over their Chinese manufacturing partnership were “unbelievable”.
Several Stellantis ventures “failed to achieve success, which is the result of lack of respect for customers in the Chinese auto market,” GAC Group said in a statement.
The latest twist in the months-long back-and-forth comes after Tavares on Thursday, during earnings presentations and an interview with Bloomberg Television, flagged growing risks in operating factories in China as its politicians increasingly meddle in business.
The joint venture “has not been able to establish a mutually reliable operating mechanism adapted to the highly competitive environment in China to reverse the negative situation of continuous losses in recent years,” GAC Group said.
This is not the end of Jeep in China, but none of the brand’s future models will be manufactured in the country; they will be exported there.
Reverse: This XJ
On this day in 2005, Jaguar announced the Daimler Super Eight, a car I had never heard of until today. For the record, this Daimler is British and completely unrelated to Daimler-Benz, and had a history of lending its name to finer Jaguars. 365 days of driving tells us this one had a TV tuner!
Neutral: I’m next
So I work from my apartment, and my facility alerted me and all my tenants late last week that it was going to test the fire alarms starting at 8 in the morning (come on!) yesterday and today. As I write this, I can hear the alarm sounding in the adjacent building. My heart pounds and the hair on the back of my neck stands on end knowing that at any moment I may be surprised by the loud, piercing sound as my soul will leave my body. I should really be longing for headphones and blasting something.