BMW Raided in German Cartel Investigation, Daimler Seeks Immunity
Back in July, German authorities became concerned that the country’s manufacturers had been operating one of the largest automotive cartels in history. With many auto executives still under the microscope for diesel emission manipulation, combined with inter-familial strife between the Piech and Porsche clans, Germany’s auto industry was starting to resemble a PG version of the film Goodfellas — with a dash of Dallas, for flavor.
Despite some rather serious accusations, nothing really came of the cartel investigation. We were beginning to wonder if it was much ado about nothing. But Germany’s antitrust officials hadn’t forgotten — they were simply biding their time during preliminary investigations into corporate collusion and price-fixing. Earlier this week, they made their big move and raided BMW’s headquarters.
In addition to BMW, both Daimler and Volkswagen Group have been implicated in the cartel accusations after Der Spiegel magazine claimed all three conspired to fix prices on various automotive components for decades. Shortly afterward, the European Commission assembled a team to begin its investigation.
According to Reuters, the commission has yet to initiate any formal antitrust proceedings against the manufacturers. But EU staff announced the first raid had only taken place on Monday, October 16th.
BMW, however, did not frame it quite the same way. Instead, it called the event an inspection and specified that it was cooperating with officials by assisting the European Commission with its work. It also wanted to absolve itself from being conflated with the emissions blowback relating to the size of AdBlue tanks.
“The BMW Group wishes to make clear the distinction between potential violations of antitrust law on the one hand and illegal manipulation of exhaust gas treatment on the other,” the company said. “The BMW Group has not been accused of the latter.”
Meanwhile, Daimler announced Friday that it has “filed an application for immunity from fines with the European Commission some time ago.” Despite being still being in the middle of this new scandal, the manufacturer has positioned itself as the one having informed officials in the first place. By doing so, it may be able to take advantage of the European Union’s leniency program — which allows the first company to come forward with illicit activity to be absolved of financial penalties.
Chief Financial Officer Bodo Uebber said he was so confident in Daimler’s action that he saw no reason to set aside any funds for possible antitrust fines from the government.
Volkswagen may also receive leniency if the matter goes to court. While it wasn’t the first to “blow the whistle,” simply being cooperative and coming forward with additional information could alleviate possible fines by up to 50 percent. VW’s current course of action is unknown but it is believed to be more willing to cooperate with regulatory investigations than BMW. As things stand now, VW has stated it hasn’t been raided but declined to comment further.
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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I'm pretty sure that the whole industry is this way. Car makers will support the artificial tiers by putting cash on the hood, never mind that mid range car X with a $1000 added to the interior will make it a class leader and probably nicer than the luxury rides two tiers up. They won't do that, so if it won't sell, then incentives....the product isn't made better or more competitive, they just jigger the pricing. We might not ever see it, but I'm sure each car maker has an exact idea what it costs to make a car by the competition. No one is going to upset what is a very profitable system...and no one will undercut the existing price and tier structure, not even the Chinese, until their homegrown cars can take on Honda, GM, MB, etc...then, it will get ugly, but we'll probably all be in electric appliances by that point.
If I had a source, I'd link...but Car makers all do a competitive analysis for other cars, part by part. This is well known. A car, past engineering, marketing and paying the talent in the C Suite, is commodity. X metal (frame/chassis/sheetmetal) An engine tires brakes Compare motorcycles....a Honda 125 is $4000, say. The worldwide Chinese knockoff of that bike $2300. A Harley is $15k. There isn't nearly $11k in materials between the two, and the basic assembly line is going to be the same. Compare my CTS to a Camaro. Same engine, trans, probably same Differential. Brakes are the same. In car electrics slightly different, but not much. All the stuff behind the dash HVAC, probably same. Better interior and more foam soundproofing ? Not $30k worth.......