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Germany's Most Powerful Automakers Face Serious Allegations

Investigation / 3 Comments

BMW, Daimler, and the VW Group. All three could be in trouble.

About a month ago we learned that BMW, Daimler, and the VW Group "may have" broken EU competition rules when they jointly agreed to delay the launch of new vehicle features that will limit emissions output from combustion engined vehicles. That's potential collusion and European regulators don't take kindly to that. Neither do their Chinese counterparts.

Automotive News Europe has learned that the Chinese Competition Authority is seeking information from all three German automakers in light of the European Commission's collusion allegation. The Chinese are also seeking information regarding two of VW Group's main subsidiaries, Audi and Porsche, both of which enjoy great popularity in China. Daimler said it is "cooperating fully" with Chinese authorities. BMW says it "can confirm that there was contact with the Chinese antitrust regulators."

BMW is already preparing to set aside over 1 billion euros due to the high likelihood of an EU fine, and now it may need to put aside an additional amount for a potential Chinese fine as well. VW Group, however, has not. "We conduct our risk assessment in close cooperation with accountants and experts founded on the details known to us at the time," said VW Group CFO Frank Witter. "That other competitors might come to differing conclusions based on their facts is certainly possible."

Because Daimler was the original whistle-blower it has been granted immunity. The automaker claims this would remain in effect if Chinese authorities decide to impose penalties.

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China has a major pollution problem caused by public transportation and has taken a harsh stance against excessive emissions. Embracing electrification, China is pushing citizens to buy hybrids, plug-in hybrids, and pure electrics, but internal combustion vehicles remain popular. These German carmakers, all of whom build powerful gasoline engines, carry a high status in a culture where that matters. It's in BMW, Daimler, and VW's best interest to cooperate with the government of the world's single largest automotive market.