GM Sued by Diesel Truck Owners Over Emissions -- 2nd Update
May 25 2017 - 3:18PM
Dow Jones News
By Mike Spector and Mike Colias
General Motors Co. was accused in a lawsuit by owners of
diesel-powered trucks of using illegal emissions software that
allowed the vehicles to bypass government emissions tests and
pollute far beyond legal limits on the road.
Owners of heavy-duty Chevrolet Silverado and GMC Sierra Duramax
pickup trucks sued GM in a Detroit federal court on Thursday,
accusing the auto maker of using so-called defeat devices that
deceived government regulators. The devices allowed the vehicles to
appear cleaner during government tests, and then emit nitrogen
oxides two to five times above allowable limits in normal driving
conditions, according to the lawsuit.
The suit targets more than 705,000 vehicles currently estimated
to be on the road, with model years between 2011 and 2016. It
follows Volkswagen's admitted emissions transgressions with illegal
diesel-emissions software and allegations that Fiat Chrysler
Automobiles NV also used defeat devices. Fiat Chrysler denies that
claim.
GM shares were off more than 2.7% in afternoon trading on the
New York Stock Exchange.
The suit says GM promised its diesel-engine technology would
turn heavy fuel into a "fine mist" and deliver low emissions that
were a "whopping reduction" from the previous model. Instead, GM
used three defeat devices that turn down emissions controls when
the vehicle isn't being tested, the lawsuit alleges.
"These claims are baseless and we will vigorously defend
ourselves," GM said. The Detroit auto maker said the vehicles
comply with all U.S. Environmental Protection Agency and California
Air Resources Board emissions regulations.
U.S. authorities haven't accused GM of any wrongdoing related to
tailpipe diesel emissions. The same law firm sued GM in June 2016
on behalf of owners of diesel-powered Chevy Cruze models, alleging
GM equipped model-year 2014 cars with defeat devices. A federal
judge in February tossed part of the suit but allowed some aspects
to move forward, including claims of fraudulent concealment.
The lawsuit filed on Thursday also alleges that Robert Bosch
GmbH worked on technology that allowed GM to implement defeat
devices on its heavy-duty diesel trucks. A Bosch spokeswoman said
it takes "allegations of manipulation of the diesel software very
seriously." Bosch is cooperating with investigations of alleged
emissions transgressions while defending itself in litigation, the
spokeswoman said.
RBC Capital Markets analyst Joseph Spak initially flagged the
suit against GM as a "negative" sentiment indicator, but later
pulled the evaluation back to "neutral," pointing to the company's
statement as an indication the lawsuit was "opportunistic."
Still, a series of lawsuits and investigations over the past few
years have called into question diesel engines that auto makers
marketed as environmentally friendly and clean.
The suit against GM comes on the heels of Volkswagen's admission
to rigging nearly 600,000 diesel-powered vehicles in the U.S. with
defeat devices, a scandal that led the auto maker to plead guilty
to criminal charges and agree to legal settlements totaling more
than $25 billion depending on how many cars it repurchases.
Volkswagen is referenced more than 80 times in Thursday's suit
against GM. "VW opened the door for speculation and now people are
asking whether all diesels are clean or not," said AutoPacific Inc.
analyst Dave Sullivan. "Everyone is going under the
microscope."
In addition, the U.S. Justice Department on Tuesday filed a
civil suit against Fiat Chrysler, accusing the Italian-U.S. auto
maker of using similar illegal software on nearly 104,000 Jeep
Grand Cherokee sport-utility vehicles and Ram pickup trucks with
diesel engines.
Fiat Chrysler has denied using illegal software intended to dupe
regulators, and contends it can update software in affected
vehicles to address concerns of U.S. and California environmental
regulators.
Thursday's lawsuit called GM "no different" than other auto
makers caught in authorities' crosshairs on emissions. The auto
maker charged a $5,000 premium on its heavy-duty diesel-engine
trucks over comparable gasoline-powered models and deceptively
marketed them as "having low emissions, high fuel economy, and
powerful torque and towing capacity," the lawsuit said.
Law firm Hagens Berman Sobol Shapiro LLP filed the purported
class-action lawsuit against GM. The firm represented consumers in
class-action litigation consolidated against Volkswagen, and has
also sued Fiat Chrysler for its alleged emissions lapses.
GM's heavy-duty diesel trucks are among the company's
most-profitable vehicles, typically selling for more than $60,000.
They represent about 12% of GM's overall pickup-truck sales,
according to RBC Capital Markets. The pickup business accounts for
more than half GM's bottom line globally, according to
analysts.
Many owners of larger pickup trucks favor diesel engines for
their durability and extra torque for hauling and towing. Analysts
have expected diesel-powered trucks to remain popular for those
reasons, despite fallout from Volkswagen's emissions woes.
GM introduced a new Duramax engine on the heavy-duty Silverado
and Sierra for the 2017 model.
Chester Dawson contributed to this article.
Write to Mike Spector at mike.spector@wsj.com and Mike Colias at
Mike.Colias@wsj.com
(END) Dow Jones Newswires
May 25, 2017 15:03 ET (19:03 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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