Fiat Chrysler Automobiles (FCA) may be running into an emissions dilemma of its own, but for completely different reasons from Volkswagen.
The company is struggling to match increasing emissions standards and may not have the capital to dig itself out, Bloomberg’s John Lippert and Jeff Plungis reported:
For the fourth consecutive year, the maker of Ram pickups and Jeep sport utility vehicles finished dead last in a 2014 Environmental Protection Agency ranking of carbon-dioxide emissions among big auto manufacturers. And 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 per cent of its profit.
“Light-duty trucks,” which include FCA’s Jeep SUVs, Chrysler minivans, and Ram pickup trucks, are the largest selling and most profitable sectors in the entire automotive industry, and have long been the bread-and-butter of American brands.
Bloomberg reported that light-duty trucks comprise 78% of FCA’s American sales volume, a proportion that is about 8% lower for rivals Ford and GM.
Ceasing production would probably not be an option for FCA, even as a short-term solution, while the money required to catch up to other car makers’ years of research and development may simply be out of reach.
The only other option may be yet another merger for the conglomerate (Fiat and Chrysler were conjoined in 2009), which makes for awkward timing less than a year after CEO Sergio Marchionne unsuccessfully tried to pair up with General Motors.
But FCA’s impending emissions woes would certainly help explain why Marchionne pushed so aggressively to make the seemingly hopeless deal work.