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EU starts legal action against Italy over Fiat Chrysler emissions

BRUSSELS/ROME - The European Commission launched legal action against Italy on Wednesday for failing to respond to allegations of emission-test cheating by Fiat Chrysler, in a procedure that could lead to the country being taken to court. The Commission said Italy had failed to convince it that devices used to modulate emissions on Fiat Chrysler vehicles outside of narrow testing conditions were justified. "The Commission is now formally asking Italy to respond to its concerns that the manufacturer has not sufficiently justified the technical necessity – and thus the legality – of the defeat device used," the Commission said in a statement. Italy has two months to respond to the Commission's request and may be eventually taken to the European Court of Justice if the answer is found to be unconvincing. Italy had asked the European Union to postpone its plan to launch legal action against Rome over emissions at Fiat Chrysler, Transport Minister Graziano Delrio said. "Considering that after the end of the mediation process, we did not receive any request for further information ... we ask that you delay starting the infringement procedure while we await a letter asking for clarification on issues raised by your relevant offices," Delrio told EU Industry Commissioner Elzbieta Bienkowska, according to the ministry's statement. The European Commission has been mediating a dispute between Rome and Berlin after Germany accused Fiat Chrysler of using an illegal device in its Fiat 500X, Fiat Doblo and Jeep Renegade models. That mediation ended without fanfare in March. EU officials have become increasingly frustrated with what they see as governments colluding with the powerful car industry and the legal move is the biggest stick the European Commission has available to force nations to clamp down on diesel cars that spew out polluting nitrogen oxide (NOx). Delrio, however, said the material Italy had sent to the Commission during the mediation process showed that the vehicles' approval process was correctly performed. Under the current system, which the Commission is trying to overhaul, national regulators approve new cars and alone have the power to police manufacturers. But once a vehicle is approved in one country, it can be sold throughout the bloc. Last December, the Commission launched cases against five nations, including Germany, Britain and Spain, for failing to police the car industry adequately.

November U.S. new car sales mixed as automakers deepen discounts

DETROIT — Major automakers posted mixed U.S. November new vehicle sales on Friday and predicted a competitive December as they rushed to sell vehicles and boost their numbers before 2017 ends. Automakers are trying to sell down 2017 model-year vehicles, offering high discounts to consumers as the year-end nears. In 2016, the industry reported record annual sales of 17.55 million units. According to consultancies J.D. Power and LMC, discounts have been above 10 percent of the average transaction price for 16 of the past 17 months, a level experts say is unhealthy and unsustainable. The November sales results come as the National Automobile Dealers Association said on Friday it expects new vehicle sales to decline to 16.7 million units in 2018, after dropping to 17.1 million for the full year in 2017. If that forecast comes true, the race to move new vehicles off dealers' lots will only intensify next year. Brandon Mason, a director at PwC's automotive practice, said a worrying trend for the industry was a rising number of subprime loans. He said subprime levels are at just over 20 percent of originations, against more than 30 percent prior to the Great Recession, but recent increases remain a concern. "That's a bit of a red flag," Mason said. "It's something to keep an eye on as we move into 2018." November results by automaker: General Motors: Sales fell 2.9 percent, with sales to consumers flat against the same month in 2016. Much of the decrease was driven by lower fleet sales. GM said strong SUV and crossover sales pushed its average transaction price for the month above $37,000 for the first time. The level of unsold cars, which has been a concern for analysts and the industry, rose slightly to 83 days' supply, from 80 days at the end of October. "More vehicles are sold in December than any other month, and we are very well positioned because we have momentum in so many segments, but especially in crossovers," said Kurt McNeil, U.S. vice president of sales operations. Fiat Chrysler Automobiles: Fleet sales are low-margin, and FCA in particular has targeted a significant reduction in this type of sale in 2017. It posted a 4 percent overall decrease in sales for November, but fleet sales were down 25 percent while sales to consumers were up 2 percent on the year. Ford: The No. 2 U.S. automaker reported a 6.7 percent increase for the month, with fleet sales up nearly 26 percent and retail sales 1.3 percent higher than in November 2016.

Fiat to list on New York Stock Exchange?

Citing the ever-nebulous "two sources close to Fiat," Reuters is reporting that the Italian automaker and owner of the Chrysler brand is likely to list itself on the New York Stock Exchange. The move could reportedly happen as soon as 2015, marking the end, at least in the minds of investors, of Fiat's 115-year base in Turin, Italy.
The Italian government is not likely to react favorably to Fiat's potential move from Italy to the United States, despite initially positive reactions to Fiat's landmark final purchase of Chrysler, the third-largest automaker in the US. Fiat spent $3.65 billion to buy out the 41.46-percent stake in Chrysler that had been owned by the United Auto Workers' VEBA trust fund.
With little sign of a swift European recovery, Fiat has little choice but to focus on markets outside its traditional home, and a listing in New York could potentially be a boon for investors. According to International Strategy and Investment analyst George Galliers, speaking to Reuters, "People [would be] more likely to think of the entity in the same context as they do Ford and GM" if it were listed on the NYSE.