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 is going to 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 that Stellantis has had to pay out as a result of cheating federal emissions tests on diesel Jeep and Ram models is a drop in the bucket compared to, say, the $30 billion that Dieselgate has cost Volkswagen. Nevertheless, Stellantis took the plea bargain in the criminal case in June, agreeing to pay $300 million in fines.
On Monday, the American arm of the company — what used to be FCA US — was finally sentenced for conspiracy to defraud the United States, commit wire fraud and violate the Clean Air Act. From Reuters:
The company had been charged with making false representations about diesel emissions in more than 100,000 U.S. 2014-2016 Jeep Grand Cherokee and Ram 1500 diesel vehicles.
The Justice Department said FCA had conspired to cheat U.S. emissions tests.
The $300 million criminal penalty “is the result of an exhaustive three-year investigation,” said Assistant Attorney General Todd Kim. “This resolution shows that the Department of Justice is committed to holding corporate wrongdoers accountable for misleading regulators.”
The government noted FCA US had previously paid a $311 million civil penalty and more $183 million in compensation to over 63,000 people as part of a class-action diesel 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 US installed deceptive software features intended to avoid regulatory scrutiny and fraudulently help the diesel vehicles meet required emissions standards.
Additionally, three FCA employees — Sergio Pasini, Gianluca Sabbioni and Emanuele Palma — will be tried for the same charges. A Stellantis spokesperson told the Detroit Free Press that claims “related to the subject vehicles have already been resolved,” and there are no outstanding recalls. Just over 100,000 vehicles, from model years 2014 to 2016, were involved in this investigation.
2nd Gear: And Now Toyota
Meanwhile Hino, Toyota’s commercial truck subsidiary, has been cheating emissions tests of its own since 2003. When the company first “admitted” wrongdoing back in March, it said it had falsified data only going as far back as 2016. An independent probe commissioned by the manufacturer has indicated otherwise, uncovering a culture where engineers were threatened not to speak up, and, evidently, nobody outside the company’s powertrain department was aware of what was going on. Again, Reuters:
The investigative committee tasked 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, composed 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 of four engines. Its findings, released on Tuesday, detail 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 engender the culture, said committee chairperson Kazuo Sakakibara, who was the former head prosecutor at the Osaka District Public Prosecutors Office.
“The magnitude of their past successes has made them unable to change or look at themselves objectively, and they have been unaware of changes in the external environment and values,” he told a briefing.
“The organisation has become an ill-organized one where people are unable to say what they cannot do.”
Hino’s president, Satoshi Ogiso, apologised to reporters and said management took its responsibilities 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 the Seattle Times. Now the company estimates the true total could be as high as 300,000.
3rd Gear: Ferrari!
They’re doing something right over in Maranello, as the company has just raised its full-year forecast after a particularly strong second quarter which saw a record number of orders. Take it away once again, Reuters:
The company said it now expected 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 euros.
“The quality of the first six months and the robustness of our business allows us to revise upward the 2022 guidance on all metrics,” Chief Executive Benedetto Vigna said in a statement.
“Also the net order intake reached a new record level in the (second) quarter,” added Vigna, who took charge of Ferrari last September.
Adjusted EBITDA rose 15% in the April-June period to 446 million euros ($456 million) topping analyst expectations of 427 million euros, according to a Reuters poll.
[...]
Shipments rose 4% in the quarter, with deliveries more than doubling in China to 358 units.
Much of this was driven by the Portofino M and F8, though hybrid models like the new 296 GTB and SF90 certainly contributed, comprising 17 percent of the company’s Q2 shipments.
4th Gear: Things You Say to Your ‘Allies’
Renault wants to split up its ICE and battery-electric auto businesses, and, frankly, it doesn’t care what Nissan and Mitsubishi think, or whether they want to contribute to the plan. From Automotive News:
“They know that we have to do it, that we will do it and we have opened the door for them to each project,” Renault CEO Officer 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 automaker’s operations is gaining traction after talks with French unions got underway and discussions also started with top management of its alliance partners Nissan and Mitsubishi Motors.
De Meo has said he will disclose details of the transformative plan in the fall after “transparent” discussions with the Japanese companies.
Hundreds of people are working on the projects that may go beyond spinning off an EV operation and could include other partners, he said in the interview.
De Meo says Renault’s boardroom shares “very good” relationships with Nissan and Mitsubishi upper management, even as Renault and Nissan appear to have emotionally checked out of this union, and are trying their hardest to financially check out, too. With everything that has happened to these companies within the last three years, this was all pretty inevitable.
5th Gear: GAC Has a Message for Jeep
Last week we learned Stellantis planned to shutter its lone factory in China, ending a partnership between state-backed Guangzhou Automobile Group and Jeep. Poor market performance for foreign makes as of late likely contributed to the decision, too. Now GAC has fired back, and wouldn’t you know it’s got some choice words for Stellantis CEO Carlos Tavares. Again, Automotive News:
Guangzhou Automobile Group on Friday said comments Stellantis CEO Carlos Tavares made the previous day on how trust had broken down between the two companies over their Chinese manufacturing partnership were “unbelievable.”
Several Stellantis ventures “failed to achieve success, which is the result of a lack of respect for customers in the Chinese automobile 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 of operating factories in China because its politicians are increasingly meddling in business.
[...]
The joint venture “has not been able to establish a mutually trustworthy operating mechanism adapted to the highly competitive environment in China in order to turn the adverse situation of continuous losses in recent years,” GAC Group said.
This isn’t the end of Jeep in China, but none of the brand’s future models will be produced inside the country; they’ll be exported there.
Reverse: This XJ
On this day in 2005, Jaguar announced the Daimler Super Eight, a car I’d never heard of until today. For the record, this Daimler is British and wholly unrelated to Daimler-Benz, and had a history of assigning its name to fancier Jaguars. 365 Days of Motoring tells us this one had a TV tuner!
Neutral: I’m Next
So I’m working from my apartment, and my facility warned me and all my fellow tenants late last week that it would test the fire alarms starting at 8 a.m. (come on!) yesterday and today. As I type this, I can hear the alarms sounding in adjacent building. My heart’s pounding and the hair on my neck is standing upright with the knowledge that, at any given moment, I could be startled by the loudest, piercing noise, at which point my soul will depart my body. I should really spring for headphones and blast something.