Fiat Chrysler shares up as investors play down EPA impact

Fri Jan 13, 2017 6:26am EST
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MILAN (Reuters) - Fiat Chrysler Automobiles (FCA) (FCHA.MI: Quote) shares rose on Friday as investors played down the potential impact of the U.S. Environmental Protection Agency (EPA) accusing the company of concealing diesel emissions.

Fiat's Milan-listed rose more than 7 percent in early trade and stood 3.53 percent higher at 9.09 euros at 1101 GMT (6:01 a.m. ET).

The shares tumbled 16 percent on Thursday after the EPA accused the world's seventh-largest carmaker of illegally using hidden software to allow excess diesel emissions to go undetected, suggesting a maximum fine of about $4.6 billion.

Larger rival Volkswagen (VOWG_p.DE: Quote) has admitted to cheating diesel emissions tests and agreed to spend up to $22 billion in the United States to address claims from owners, environmental regulators, U.S. states and dealers.

FCA lacks Volkswagen's cash pile but analysts said its case looked much less severe than that of its German counterpart.

The EPA said FCA failed to disclose engine management software in 104,000 U.S. vehicles leading to an increase in emissions of nitrogen oxides (NOx). However, the authority has not yet labeled them "defeat devices" as in Volkswagen's case.

FCA Chief Executive Sergio Marchionne categorically rejected the allegations on Thursday saying there was no wrongdoing and the company never attempted to create software to cheat emissions rules. He also stressed FCA's situation cannot be compared with VW's.

Analysts drew best and worst case scenarios, estimating potential fines ranging from several hundred million dollars to $4 billion. But they said the likelihood of hefty fines were very low.

"Our base case is that the current violation notice is settled as a reporting violation of $140 million, a very manageable figure for FCA," said Stuart Pearson, an analyst at Exane BNP Paribas.   Continued...

A screen displays the trading information for Fiat Chrysler Automobiles NV at the post where it's traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 12, 2016.  REUTERS/Brendan McDermid