New scandal hits German automotive industry

BERLIN, July 27 (KUNA) -- German automotive industry is grappling with a new scandal that has hit five of its giants.
The scandal was unveiled by the German magazine Der Spiegel on Friday when it reported that Volkswagen, Audi, BMW, Porsche and Daimler may have been engaged in industrial collusion and anti-competitive behavior.
It reported that "the German car industry agreed in secret working groups about technology in their vehicles, costs, suppliers, markets, strategies and even about the emissions treatment of their diesel vehicles." Automakers Audi, Porsche, BMW and Daimler, as well as Volkswagen, secretly worked together from the 1990s onwards on issues including polluting emissions from diesel vehicles, it added.
If proven true, the EU could fine the automakers as much as 10 percent of their collective annual sales, a figure which could result in a penalty of as much as EUR 50 billion (or USD 58.3 billion).
Following the report, shares of the giant carmakers fell sharply amid fears of legal actions both at home and abroad.
In a first reaction, the BMW group rejected the allegations, saying that it does not manipulate emission tests and that it complies with legal requirements saying it was "a matter of principle" for the premium carmaker.
Both Daimler; the manufacturer of luxury Mercedes-Benz vehicles, and VW have described the reports as "speculation." Meanwhile, the European Union and German antitrust regulators said they have launched probe into the claims.
The European Commission said it had received information on the alleged collusion, which it was currently assessing.
German Economics' Minister Brigitte Zypries said she takes very seriously the allegations, which could have grave impacts on the credibility of the country's auto industry.
"What's at stake here is nothing less than the credibility... of 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." For his part, German Social Democrat leader Martin Schulz demanded that the matter be clarified and the managers responsible punished.
"If the claims of cartel formation are confirmed it would be an outrageous practice. It would be a gigantic case of fraud at the expense of customers and often mid-sized suppliers," Schulz said.
The new allegations are the latest in a series of scandals that have rocked the country's automotive industry over the past three years, beginning with the revelation in September 2014 that Volkswagen has systematically sought to evade emissions standards in its diesel cars with so-called "cheat devices" that eventually cost the world's biggest automaker more than 22.6 billion euros in fines, penalties and recall expenses.
The automotive industry accounts for about 20 percent of Germany's industry revenue and employs approximately 800,000 people. (end) anj.ibi