(AOF) – Cummins is among the biggest decliners in the S&P500 index this Friday after announcing an agreement in principle with the authorities regarding its emissions certification process for certain engines used in pickup trucks. The American diesel engine producer expects to record a charge of approximately $2.04 billion in the fourth quarter of 2023 on this account. It says it conducted a thorough internal review and worked collaboratively with regulators for more than four years.
This in-depth examination did not allow him to detect “evidence that anyone acted in bad faith” and he “does not admit wrongdoing”.
According to the U.S. Department of Justice, Cummins has agreed to pay a $1.675 billion fine to settle charges that it violated the Clean Air Act by installing emissions control devices on hundreds of thousands of engines.
“Overriding devices are parts or software that bypass, neutralize or render inoperative emissions controls such as emission sensors and on-board computers,” the executive specifies, stating that the group “would have installed defeat devices on 630,000 RAM 2500 and 3500 pickup truck engines from model years 2013 through 2019″ and “undisclosed auxiliary emissions control devices on 330,000 RAM 2500 and 3500 pickup truck engines from model years 2019 through 2023.”
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Negotiations with manufacturers
On average, equipment manufacturers represent between 60 to 85% of the manufacturing cost price of a vehicle. According to the Federation of Vehicle Equipment Industries (Fiev) negotiations are very tense with manufacturers regarding the passing on of the increase in costs. The price increases concern electronic components, raw materials, such as steel, nickel, lithium or palladium, energy and transport. The equipment manufacturers mainly negotiate with Stellantis and Renault to set up indices to pass on the increases. They are also betting on innovation, differentiation, moving upmarket and internationalization.