Car­tel probe looms over Ger­man car in­dus­try

Kuwait Times - - BUSINESS -

Ger­man car­mak­ers faced a brew­ing scan­dal yes­ter­day as sus­pi­cions grew they col­luded il­le­gally for decades, fur­ther dam­ag­ing the in­dus­try’s im­age and ex­pos­ing it to mas­sive fi­nan­cial risks.

News weekly Der Spiegel re­ported Fri­day that Ger­man car­mak­ers Volk­swa­gen, Audi, Porsche, BMW and Daim­ler had se­cretly worked to­gether from the 1990s on­wards on huge ar­eas of car devel­op­ment, con­struc­tion and lo­gis­tics-in­clud­ing how to meet in­creas­ingly tough emis­sions cri­te­ria in diesel ve­hi­cles. Both buy­ers and sup­pli­ers of the auto giants suf­fered from the un­der-the-ta­ble deals, the mag­a­zine al­leged.

For the world’s largest car­maker Volk­swa­gen, the diesel emis­sions scan­dal alone has al­ready cost tens of bil­lions of eu­ros since it ad­mit­ted to cheating on reg­u­la­tory tests in 2015. That is likely why the Wolfs­burg-based firm, along with Mercedes-Benz par­ent Daim­ler, was one of the first to hand over de­tails of the al­leged broader col­lu­sion be­tween the five firms to com­pe­ti­tion au­thor­i­ties, re­ported Spiegel, say­ing it had seen a VW doc­u­ment sub­mit­ted to the au­thor­i­ties.

Reg­u­la­tors of­ten treat the first com­pany to re­port such in­fringe­ments more le­niently than the rest. And Daim­ler has ex­pe­ri­ence: it suf­fered a bil­lion-euro fine from Brus­sels last sum­mer af­ter agree­ing on prices for its trucks with three Euro­pean com­peti­tors. In the­ory, the max­i­mum fine from the Euro­pean Com­mis­sion or Ger­many’s fed­eral com­pe­ti­tion au­thor­ity could reach 10 per­cent of a firm’s rev­enueor close to 50 bil­lion eu­ros ($58.3 bil­lion) across all five car com­pa­nies, based on their 2016 sales.

On top of that would come in­di­vid­ual claims from cus­tomers. Many buy­ers could have paid “a price that was far too high” for their ve­hi­cles, Klaus Mueller of the VZBV con­sumer fed­er­a­tion told news­pa­per Sued­deutsche Zeitung yes­ter­day.

No in­quiry yet

It could be some time be­fore the full de­tails of the au­tomak­ers’ co­op­er­a­tion come to light. Both Brus­sels and Ger­man au­thor­i­ties say they have re­ceived in­for­ma­tion on the pos­si­ble agree­ments be­tween the firms. These are now “un­der­go­ing ex­am­i­na­tion by the Com­mis­sion,” the EU’s ex­ec­u­tive arm said Satur­day, while adding that it would not “spec­u­late fur­ther” on the out­come.

Volk­swa­gen has said noth­ing, al­though its su­per­vi­sory board is set to meet on Wed­nes­day, while Daim­ler in­sisted that it ap­plies an in­ter­nal com­pe­ti­tion law com­pli­ance pro­gram. Mu­nich-based BMW de­nied any col­lu­sion with com­peti­tors Sun­day, adding that none of its ve­hi­cles had been ma­nip­u­lated to meet diesel emis­sions norms. Among the ar­eas Spiegel re­ported man­u­fac­tur­ers col­lab­o­rated on in its re­port Fri­day was the size of tanks for a liq­uid known as AdBlue, used to treat diesel ex­haust fumes.

The fluid re­acts with harm­ful ni­tro­gen ox­ides found in the emis­sions and trans­forms them into wa­ter and ni­tro­gen. But car­mak­ers agreed not to add large re­serves of the ad­di­tive to their ve­hi­cles, Spiegel re­ported, pre­fer­ring to save space for cus­tomers’ golf bags or prof­itable up­grades such as speaker sys­tems. Rather than call on driv­ers to re­fill the tiny AdBlue tanks ev­ery few thou­sand kilo­me­tres, Volk­swa­gen built sys­tems into mil­lions of ve­hi­cles that re­duced ex­haust treat­ment un­less soft­ware de­tected the car was un­der­go­ing a reg­u­la­tory emis­sions test.

Other man­u­fac­tur­ers in­clud­ing Daim­ler are sus­pected of do­ing the same. “If this turns out to be true it would cost tens of bil­lions of eu­ros al­to­gether, and sin­gledigit bil­lions for each man­u­fac­turer,” an­a­lyst Frank Sch­wope of Nord/LB bank told AFP. The re­ports have also spooked in­vestors, with car in­dus­try stal­warts trail­ing on the DAX in­dex of blue-chip Ger­man shares yes­ter­day.

SALZGITTER, Ger­many: Aerial view taken from an ul­tra-light air­craft shows cars of Ger­man car maker Volk­swa­gen (VW) stand­ing on a park­ing site of the com­pany’s plant in Salzgitter, north­ern

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