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Automotive Corruption: German Manufacturer Collusion could spell bankruptcy

by / 0 Comments / 04/08/2017

Just under two years ago in September 2015, Volkswagen was caught cheating in its emissions tests resulting in a scandal known as Dieselgate, a scandal that has left Volkswagen’s international reputation in tatters. However, it now appears that the scandal goes deeper.

 

In fact, the scandal goes to the very heart of the German automotive industry as not only the VW Group, a conglomerate that includes Porsche and Audi in its ranks, but BMW and Daimler (Mercedes) are being investigated for illegal market fixing.

This market collusion reportedly stretches back to meetings that took place over twenty years ago in the early-1990s and appears to show the automotive giants fixing the market on everything; from braking systems to new advanced technologies and from engines to, most notably, their associated emissions.

Part of what the EU Commission is also investigating is whether these meetings and their consequent decisions led to the manufacturers deciding to cut deliberate corners. This includes the decision by the manufacturers to sacrifice a correctly-sized AdBlue tank, a system used to reduce emissions in diesel cars which if too small does not stop all the emissions, for a big boot. The investigation wants to know therefore if this led to VW having to cheat in its emissions tests to allow their cars to go on sale.

The effect this will have on the British public will be substantial, with 800,000 German vehicles being sold in the United Kingdom in 2016 alone. If the allegations are true then British buyers will, in a legal context, be considered to have been overcharged and will therefore meet the conditions for a full refund. This, due to the fact that the vehicle will have been sold to them in a sub-standard and therefore unsafe condition.

With the European Union’s ability to fine each company up to ten per cent of its annual sales and the millions of vehicular refunds applicable in the United Kingdom and European Union, BMW, The VW Group and Daimler could well find themselves in a position of bankruptcy.

This is a position that would not only affect the motoring world but the motorsport arena too. BMW and Mercedes would be particularly badly affected, with both entering teams into Formula E as well as the former entering the GTE class at Le Mans and the latter currently funding the cost of an entire Formula One team and an expensive hybrid engine programme.

Add in Porsche’s LMP1 and GTE Programmes, as well as Audi’s Formula E and GT3 cars and you have a cocktail that could seriously reduce German manufacturer presence in motor racing.

The focus, for now however, is on the road car market and the implications of this investigation on it. An investigation that could mean that the German Automotive industry’s reputation could become less ‘Vorsprung Durch Technik’ and more Vorsprung Durch Wrecknik.

I am currently an Undergraduate student studying War Studies and History at Kings College London. I report on both politics and motor-racing.