Fiat Emissions Cleared by Italy as Germany Seeks Wider Probe

  • Italy transport ministry argues Fiat cars meet emissions rules
  • Germany has doubts about the certification of Fiat’s vehicles

Italy rebuffed German efforts to look more deeply at Fiat Chrysler Automobiles NV, arguing the automaker’s vehicles don’t breach emissions rules.

The Italian Transport Ministry’s tests showing Fiat used no unauthorized devices on its vehicles still stand, an Italian government official said. Germany this week escalated a months-old dispute between the two countries, asking the European Union to step in.

The German Transport Ministry wants the EU’s executive arm to intervene in the feud with its Italian counterpart by setting up consultations to find a resolution to disagreements over the test results, according to a letter dated Wednesday obtained by Bloomberg News. The Italian Transport Ministry hasn’t received any formal request, said the official, who asked not to be identified by name because the government isn’t officially commenting.

Under EU rules, Italy is responsible for testing Fiat because the automaker’s regional operations are based in the country. German Transport Minister Alexander Dobrindt said in May that he doubts Fiat’s cars are in line with rules for emissions certification. Italian Transport Minister Graziano Delrio replied in a Bloomberg interview a month later that the carmaker’s vehicles were “absolutely fine” and the company showed “maximum transparency.”

Shares Drop

"Germany can’t do much as Delrio is right in saying Italy has the authority, and he has said, ‘Fiat cars are fine, respect the rules,”’ said Vincenzo Longo, a strategist at IG Group in Milan. "Investors don’t seem too worried about the issue."

Fiat shares were down 1.2 percent as of 11:09 a.m. in Milan trading. The stock has dropped 30 percent this year, valuing the automaker at 7.85 billion euros ($8.78 billion).

Germany stepped up scrutiny of auto emissions in the aftermath of Volkswagen AG’s emissions-cheating scandal, including reviewing carmakers outside its jurisdiction. The dispute with Italy stems chiefly from a loose interpretation of EU regulations that allow automakers to adjust pollution-control systems to protect the engine. Germany has moved to close the loophole and has also strong-armed German-based automakers to voluntarily recall 630,000 vehicles to upgrade emissions systems that turned off exhaust controls at certain temperatures.

“We understand that the dialogue between Germany and Italy is ongoing and we will follow developments closely,” European Commission spokeswoman Lucia Caudet said on Thursday, adding that the Commission has not yet received a formal request to intervene. “It is first and foremost a dialogue between the two member states.”

Fiat, which declined to comment on Germany’s letter, said in May that “all its vehicles comply with emissions regulations and the company doesn’t cheat on emissions tests.”

The auto industry’s credibility has been strained following VW’s admission last September that it rigged diesel-engine software to cheat on official emissions tests. Mitsubishi Motors Corp. has since acknowledged that it manipulated fuel-economy tests, and Daimler AG is checking for possible irregularities in its vehicle certifications at the behest of the U.S. Department of Justice.

Fiat is also under investigation by U.S. authorities amid allegations it inflated sales figures. The carmaker, which is cooperating with probes by the Justice Department and the Securities and Exchange Commission into the reporting of U.S. vehicle deliveries, has revised the way it reports those numbers as a result of the ongoing investigations. Under the new method, its streak of monthly sales gains in the country would have ended in September 2013 rather than continuing through June of this year.

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