German Manufacturers Charged with Collusion

Well this is a damaging blow to the “vorsprung durch technik” aka progress through technology line spun by one German manufacturer. The EU has expanded on the VW Group emissions testing scandal by laying more charges against VW, Audi and Porsche along with BMW and Mercedes-Benz, in other words, pretty much all of Germany’s mainstream manufacturers!

In the original issue, Audi engineers developed software in the engine management CPU that detected when the car was connected to a testing machine and then ran the engine in a configuration to give the testers the answer they were looking for. In this instance, the EU regulators found discrepancies with the catalytic converters and the amount of emissions that were passing through – the catalytic converter is supposed to help neutralise the emissions, especially when it is a diesel engine with an Adblue additive.

Daimler will probably get away with the offence because they were the whistleblowers even though technically they were as complicit as the others in possibly breaking EU competition laws. Apparently the “circle of five” held joint meetings over an eight year period where they shared information to limit the use of more efficient but more expensive filters with the catalytic converters. Therefore the EU has decided that they “denied the consumer an opportunity to buy the best technology available“. This might have more to with the manufacturers not wanting to pass on a higher price to the consumer.

In fact that is BMW’s argument and a spokesperson said this was “an attempt to equate permissible coordination of industry positions regarding the regulatory framework with unlawful cartel agreements and cannot be compared with cartel investigations involving territorial and price agreements, for example“. That’s a mouthful!

We wonder if the manufacturers looked at the technology and decided that adding the better filters was not going to be a sales winner and could increase the retail price of their cars too much. We also wonder why the high end ranges didn’t get the improved filters because a buyer wouldn’t have noticed the increase in price and they certainly would be buying a much more technologically advanced vehicle.

With the amount of cars sold in Europe for these brands one would think that the economies of scale would have brought the unit price of each filter down – in 2018, these five manufacturers sold 4.4M cars combined and within the groups another 1.3M could also have used the filters (being from Skoda, Seat and Smart). That doesn’t count in lower volume cars from Rolls-Royce, Bentley, Lamborghini and Bugatti who are all part of the these groups and who don’t simply rebadge other vehicles.

The current status is that the EU has released statements of objection that the manufacturers are reviewing with possible legal action to follow. The statements say that it is fine to collude to develop new technology – in other words “jointly develop”, however it is not good to collude to ignore new technology and not use it. For diesel engines, the EU charges that not enough Adblue was specified in each dose and for petrol engines, it was the issue around the filters.

We also wonder how much pressure the German Government will apply to the EU to reduce the impact of these issues. It is known that prior to the first issue with the VW Group, when the British Government found higher levels of emissions coming from German sourced vehicles, it was the Government in Berlin that persuaded the House of Commons to delay any action. This was because it would have lead to potential job losses in Germany heading into an election which in turn would have damaged Angela Merkel’s chances of being re-elected!

Image by Toby Parsons from Pixabay.