Fiat Chrysler Automobiles NV will pay more than $500 million (Dh1.8 billion) in fines and recall and fix thousands of vehicles under civil settlements announced Thursday by California and the US Justice Department, which alleged some of its diesel-powered vehicles violated clean-air rules.
The company is also expected to pay more to resolve claims brought by owners of the affected diesel vehicles and some US states. The cost of the consumer case could reach $307.5 million if every eligible person files a claim, according to the consumer consent decree.
Fiat Chrysler won't have to admit wrongdoing, according to documents filed Thursday in federal court in California.
The company will agree to pay owners of roughly 104,000 diesel-powered SUVs and pickups to update the emissions software on the vehicles via a recall, according to the terms of a consent decree filed on behalf of consumers.
The settlement is scheduled to be announced later Thursday by the Justice Department in Washington, according to a person familiar with the case, who spoke on the condition of anonymity to discuss the agreement before it was announced. It will mark a milestone in the second major case brought by American officials against an automaker for Clean Air Act violations stemming from diesel vehicles equipped with pollution controls prohibited by U.S. law.
Volkswagen AG in January 2017 pleaded guilty to criminal charges and agreed to pay some $4.3 billion in U.S. penalties for its scheme to deliberately rig hundreds of thousands of U.S. diesel vehicles to cheat on emissions tests. The VW scandal extended to some 11 million other vehicles the company sold worldwide and led to U.S. criminal charges against eight people. The company has set aside more than $30 billion to cover costs and settlements, including $15 billion to buy back or fix vehicles in the US.
The pact will resolve civil claims by the Justice Department on behalf of the U.S. Environmental Protection Agency that some Jeep Grand Cherokee and Ram 1500 models contain pollution-control software that improperly limits pollution during lab tests while allowing the vehicles to spew excess emissions on the road.
Fiat Chrysler will agree to corporate governance reforms intended to prevent future emissions violations under the agreement, the person said. To mitigate the vehicles' excess emissions, Fiat Chrysler will also provide funds and work with a catalytic converter manufacturer to offer drivers better emissions reductions when they replace that part.
Representatives for Fiat Chrysler and the Justice Department declined to comment before the announcement. The company has denied intentional wrongdoing. It has already set aside about $810 million to cover settlements and other costs stemming from the diesel matter.
The diesel vehicles also won't suffer any degradation in performance or fuel economy following the software update, a second person familiar with the matter said.
The Justice Department filed a civil lawsuit against Fiat Chrysler in May 2017, accusing the company of using so-called defeat devices to mask pollution levels of its vehicles so they would pass government tests.