Yahoo Finance General Motors (GM) Faces $146M Fine for Excess Emission
General Motors Company GM will pay nearly $146 million in penalties to the federal government due to 5.9 million of its older vehicles failing to meet emissions and fuel economy standards.
Per the National Highway Traffic Safety Administration (NHTSA), certain GM models from 2012 to 2018 did not comply with federal fuel economy requirements. This penalty follows the Environmental Protection Agency's (EPA) findings that the company's pickup trucks and SUVs emit more than 10% carbon dioxide on average than initially claimed by General Motors’ compliance tests. The automaker will also cancel 50 million metric tons of greenhouse gas credits from the EPA and approximately 30.6 million gas mileage credits from the NHTSA.
Per EPA, the vehicles will remain operational and cannot be repaired. On average, they consume at least 10% more fuel than indicated on the window stickers, but GM will not be required to update these stickers.
Per the automaker, it adhered to all pollution and mileage certification regulations and does not admit to any wrongdoing or violations of the Clean Air Act. Per Bill Grotz, General Motors’ spokesman, the issue arises from a change in EPA testing procedures implemented in 2016.
Vehicle owners are not required to take any action, as there is no defect in the vehicles. The enforcement action covers about 4.6 million full-size pickups and SUVs, and about 1.3 million midsize SUVs, including models like the Chevy Tahoe, Cadillac Escalade and Chevy Silverado, totaling around 40 variations.
In a quarterly filing with the Securities and Exchange Commission, GM estimated the total cost to resolve the matter would be $490 million. Since the automaker agreed to address the excess emissions, the EPA deemed a formal determination regarding the reasons for the excess pollution unnecessary.
In similar cases, automakers have been fined under the Clean Air Act, with the Justice Department typically involved. In 2014, Hyundai and Kia paid a $100 million civil penalty to settle a two-year investigation into overstated gas mileage on window stickers for 1.2 million vehicles.
Zacks Rank & Key Picks
GM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Blue Bird Corporation BLBD, Geely Automobile Holdings Limited GELYY and American Axle & Manufacturing Holdings, Inc. AXL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.29% and 155.14%, respectively. The EPS estimates for 2024 and 2025 have improved 63 cents and 69 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for GELYY’s 2024 sales suggests year-over-year growth of 36.63%. The EPS estimates for 2024 and 2025 have improved 21 cents and 34 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXL’s 2024 sales and earnings suggests year-over-year growth of 3.05% and 544.44%, respectively. The EPS estimates for 2024 have moved up 5 cents in the past 60 days. The EPS estimates for 2025 have moved up 20 cents in the past 30 days.
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General Motors Company (GM) : Free Stock Analysis Report
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