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Fiat Chrysler hit with civil lawsuit over emissions cheating by US Government

Fiat Chrysler has become the latest auto manufacturer to be accused of using software designed to artificially lower vehicle emissions when being tested by regulators.

The US Government filed a civil lawsuit yesterday against the international car firm, accusing it of illegally using software to bypass emission controls in 104,000 diesel vehicles sold since 2014.

The Justice Department lawsuit is a procedural step that may ramp up pressure on Fiat Chrysler and comes amid growing scrutiny of diesels by regulators around the world.

The lawsuit could ultimately help lead to a settlement, as in an earlier probe of Volkswagen that will cost VW up to $25bn (£19bn), but which affected a much larger number of vehicles.

VW admitted to intentionally cheating while Fiat Chrysler (FCA) denies any wrongdoing.

The company said on Tuesday it was disappointed the Justice Department had filed a suit and would vigorously defend itself against claims that “it engaged in any deliberate scheme to install defeat devices to cheat US emissions tests.”

The lawsuit also names Fiat Chrysler’s unit VM Motori SpA, which designed the engine in question. The suit said VM employees from Italy worked at Fiat Chrysler’s Michigan headquarters on engine calibration and air emission issues.

FCA acquired a 50 per cent stake in VM Motori in 2010 and the remainder in October 2013.

The lawsuit asserts the Italian-American automaker placed undeclared “defeat devices,” or auxiliary emissions controls, in 2014-2016 Fiat Chrysler diesel vehicles that led to “substantially” higher than allowable levels of nitrogen oxide, or NOx pollution, which is linked to smog formation and respiratory problems.

The lawsuit asks a court to require Fiat Chrysler to fix the vehicles and bar it from selling vehicles with excess emissions as well as unspecified civil penalties. EPA said in January the maximum fine is about $4.6bn.

Earlier this month an international research team revealed it had found the “smoking gun” in VW’s on-board vehicle software that allowed it to mask emissions from regulators. 

In January, EPA and California accused Fiat Chrysler of illegally using undisclosed software to allow excess diesel emissions in 104,000 US 2014-2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks. The company plans to update software which it expects will resolve the concerns of U.S. regulators about excess emissions in those vehicles.

Meanwhile, according to industry sources, Indian automakers are to urge the government to lower a proposed sales tax on hybrid vehicles, as they fear the planned rate could make development of the technology unviable.

Last week, India said it would tax hybrid vehicles at a rate as high as 43 per cent under a new unified tax regime set to come into effect from 1 July. That would be significantly higher than the prevailing tax of about 29 per cent on such cars.

India’s auto trade body, whose members include companies such as Maruti Suzuki, Mahindra & Mahindra and Toyota Motor Corp, will push to lower the proposed rate, an industry source involved in the matter said.

If the tax is not reconsidered it will essentially make all hybrid cars unviable, R.C. Bhargava, chairman of Maruti Suzuki, the country’s top-selling carmaker, said.

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