Commentary

Collusion Charges Rattle German Auto Industry

BMW has denied charges published Friday that it colluded with other German automakers for years on technology including a system to control diesel emissions. 

“On Friday, the German publication Der Spiegel claimed that BMW, along with Volkswagen, Audi, Porsche, BMW and Daimler, had been involved in secret negotiations over various technological issues systems since the 1990s, including a discussion of how large the ‘AdBlue’ tanks should be that are used in diesel vehicles,” reports Edward C. Baig for USA Today

“AdBlue is a liquid chemical that helps reduce the emission of oxides. The publication alleged the smaller tanks used means there is not a sufficient amount of the chemical to properly clean the exhaust gases,” Baig continues.

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The implications of the charges could be far-reaching; German auto stocks are already “skidding” in the market today with Der Spiegel claiming, as Baig writes, “the controversy could result in one of the ‘biggest scandals’ in German economic history.”

And “if proven, the allegations could plunge an industry already battered by Volkswagen’s emissions-cheating scandal into a fresh crisis,” writes Guy Chazan for Financial Times.

“Brigitte Zypries, German economics minister, said she took ‘very seriously’ the allegations the allegations that Volkswagen, Audi, Porsche, BMW and Daimler ‘had for years run secret technology working groups.’

“What’s at stake here is nothing less than the credibilityof the whole German car industry. Without comprehensive clarification, confidence cannot be restored,’ Zypries said. She added that all the carmakers implicated in the allegations would be ‘well advised to fully co-operate with the authorities and ensure transparency,’” Chazan reports.

“With uncertainty clouding the German auto industry, BMW said it has gone farther than competitors to ensure its diesel cars meet regulatory guidelines while still performing well on the road. The company says it combines AdBlue fluid to neutralize pollutants as well as a system that stores nitrogen-oxide emissions, adding it sees no reason to recall or upgrade its latest diesel vehicles. The company is offering a voluntary upgrade on older Euro 5 models,” writes Elisabeth Behrmann for Bloomberg.

Munich-based BMW “categorically denied” the allegations that its Euro 6 diesel vehicles do not provide adequate exhaust gas treatment due to AdBlue tanks that are too small.

“We compete to provide the best exhaust treatment systems. Unlike other manufacturers, BMW Group diesel vehicles employ a combination of various components to treat exhaust emissions,” it said in a statement…. “With this combination of technologies, we fulfill all legal emissions requirements and also achieve a very good real-life emissions performance.”

Der Spiegel’sexpose is based on a document submitted by Volkswagen in July 2016 to the European Commission.

The EC, meanwhile, “confirmed that Volkswagen AG asked the region’s antitrust watchdogs to scrutinize decades of possible coordination efforts by the country’s main auto manufacturers,” William Boston and Andrea Thomas write for the Wall Street Journal. “It is premature at this stage to speculate further,” a representative said in a written statement.

“The decision by VW to lift the veil on behavior it thinks could have been illegal was part of an effort by management to review past practices and invite closer scrutiny by authorities after a diesel emissions-cheating scandal engulfed the company,” a source tells Boston and Thomas.  

Green groups, consumer advocates and political candidates kicked up a storm over the weekend in the wake of the Der Spiegel story.

“Adding to the pressure, the accusations against the automakers showed signs on Sunday of becoming an issue in coming national elections. Chancellor Angela Merkel and her transport minister, Alexander Dobrindt, faced increasing criticism that they had been overly accommodating to the carmakers and had enabled wrongdoing by them,” reports Jack Ewing for the New York Times.

“Such harsh criticism of the auto industry is unusual in Germany, and it illustrates the degree to which public opinion is turning against the carmakers. Motor vehicles are the country’s biggest export, and Volkswagen, Daimler and BMW are among Germany’s largest employers,” Ewing points out.

“The allegations also come at a time when both Daimler and Volkswagen are still dealing with other emissions-related woes. … Daimler meanwhile voluntarily recalled some 3 million Mercedes-Benz vehicles in Europe earlier this month to fix excess emissions from its diesel engines,” Lucinda Shen writes for Fortune.

“The three companies represented about 16% of the world's car production in 2015, according to the most recent data from the International Organization of Motor Vehicle Manufacturers,” Shen reports.

Daimler and Volkswagen, which owns Audi and Porsche, have yet to comment on the collusion reports.

 
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