There are potential fines heading towards Fiat Chrysler Automobiles, as the company gets caught up in an emissions scandal similar to that of Volkswagen last year. Some people are worried how these fines will impact the Ferrari team, given their ties with FCA.
The Environmental Protection Agency has alleged that Fiat Chrysler Automobiles used software to surpass the legal amount of emissions. The situation is similar to the scandal involving Volkswagen, which also involved a software. Volkswagen recently admitted guilt to the claims and agreed to pay a $4.3 billion fine for the incident, adding to the losses caused by the incident. Some believe that the incident also led to the withdraw of Audi, a subsidiary of Volkswagen, from WEC at the end of 2016.
The issue with FCA is that the company is swimming in debt: approximately $4.7 billion worth. If the company is handed the same fines that Volkswagen has received, it’s possible that the company could be forced into bankruptcy. This has caused some concern for Formula One fans, given the link between Ferrari and FCA.
Those saying that Ferrari will be impacted by the fines have forgotten something important. Although Fiat once owned Ferrari, Ferrari and Fiat cut ties when Fiat acquired Chrysler a couple of years ago. This means that the two companies are no longer linked on paper, shielding Ferrari from the fines and debt of FCA.
Since the emissions scandal impacts Jeep and Ram vehicles, it would likely be FCA US LLC that would claim bankruptcy, protecting Maserati and FCA Italy from the debt. This would also, in theory, protect the main FCA parent company from debt. Even if the entire FCA company was shut down, Ferrari is not included in the company anymore and should not be impacted. The only thing linking Ferrari and FCA is Exor, the company that owns a stake in both Ferrari and FCA. However, even they should be protected if FCA goes bankrupt.
The question is, how will any FCA fines impact the Ferrari management. Sergio Marchionne serves at both the CEO of FCA and chairman/CEO of Ferrari. He is due to step down from FCA at the end of 2018, but if his credibility is damaged badly by these allegations, it’s possible that we could see him step down or booted from both Ferrari and FCA sooner than planned.
Given the situation, there is no reason for Ferrari fans to panic about their beloved team and brand. The company seems to be reasonably shielded from any damage done to FCA. Not to mention that we don’t even know the validity of the EPA’s claims at this point. FCA could be completely innocent, but only time will tell.
The bottom line is that the Scuderia Ferrari is not at risk of bailing from Formula One because of this situation, even though some sources are claiming otherwise.
The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer or company. Assumptions made in any analysis contained within this article are not reflective of the position of any entity other than the author.
