General Motors Company (NYSE:GM) is the latest car maker to stand accused of cheating on emissions tests. GM stock fell 1.8% yesterday on about 2.5 times the average daily volume. Shares are little changed this morning in pre-market trading.
A lawsuit filed yesterday in Michigan, consumers allege that GM manufactured 700,000 trucks with illegal devices that disguised actual emissions levels. The proposed class action claims that some vehicles — the Chevrolet Silverado Duramax diesel and GMC Sierra Duramax diesel trucks — emit as much as five times the legal amount of nitrogen oxide pollutants.
The Department of Justice sued Fiat Chrysler Automobiles NV (NYSE:
FCAU) on Tuesday concerning more than 100,000 diesel Ram 1500s and Jeep Grand Cherokees. The DOJ claims that the vehicles contain “at least eight software-based features” to fool the cars’ emissions control systems. Volkswagen admitted earlier this year to emissions control tampering when it agreed to pay $4.3 billion in civil and criminal fines as part of a settlement with U.S. regulators.
GM denied the allegations, issuing a statement that said: “These claims are baseless and we will vigorously defend ourselves. The Duramax Diesel Chevrolet Silverado and GMC Sierra comply with all US EPA and (California) emissions regulations.”
The filing against GM charges that car maker sought to increase sales and profits by ensuring better engine performance which “drove GM to use at least these three defeat devices in its Duramax diesel engines”. These devices enabled General Motors to “obtain and market higher power and efficiency from its engines while still passing the cold-start emissions certification tests.” The result was that GM’s trucks were “more competitive in the marketplace, driving up sales and profits.”
GM stock is down more than 6% this year. InvestorPlace contributor Chris Tyler noted earlier this month, “shares are rolling over as bearish traders pile into GM following weak April sales data which appears to confirm the ominous narrative of peak auto sales having begun.”
