Did German auto manufacturers cheat consumers over emissions?

The Yomiuri ShimbunNew allegations have surfaced of a cartel involving German automobile manufacturers, who have already been buffetted by a scandal related to exhaust emissions.

The European Commission, the executive arm of the European Union, has started a full-fledged investigation of five German auto companies on suspicion of a cartel based on the EU competition law to prevent monopolies.

The automakers allegedly coordinated with each other to avoid competition over technological developments related to the purification of exhaust emissions.

The five automakers targeted by the investigation are Daimler, BMW, Volkswagen (VW), and Audi and Porsche in the VW group.

European Commissioner Margrethe Vestager said in a statement, “If proven, this collusion [by the automakers] may have denied consumers the opportunity to buy less polluting cars.” It is said that huge fines could be imposed on them.

If the allegations are true, that means that the automakers industry-wide systematically neglected efforts to address environmental issues, thereby saving on costs. This would be an act of betrayal that deceived consumers. When did the cartel start and how large was it? The entire picture should be swiftly clarified.

There is no end to the scandals in the German automobile industry, beginning with VW’s evasion of emission regulations that came to light in the United States in 2015. The German automaker installed unlawful software in diesel-powered vehicles to contain emissions of harmful substances in emission tests.

Tighten lax discipline

The U.S. Justice Department has filed criminal charges against former VW executives including its former CEO, and VW was forced to shoulder a burden of about $20 billion (about ¥2.3 trillion), including fines, in the United States alone. It is fair to say that this case proved the price of betraying consumers’ confidence is high.

Similar cheating has also been perpetrated by other carmakers. German prosecutorial authorities have already started a full-fledged probe into BMW, including an on-site investigation at its headquarters. In June, the then CEO of Audi was arrested.

The series of scandals have accelerated consumers’ disillusionment with diesel-powered vehicles, which resulted in a more difficult business environment for German automakers.

Environmental regulations on diesel-powered vehicles, an area in which German automakers are strong, have been strengthened. A shift to electric vehicles is likely unavoidable.

Automakers need to significantly cut costs to secure a huge amount of funds for future EV development. It seems that each company, which has this common challenge, got involved in various wrongdoing in order to curb the costs of developing diesel-powered and other vehicles.

Cases of sloppy management have been brought to light one after another among Japanese automobile manufacturers as well, such as the falsification of fuel efficiency data and the inspection of finished vehicles by unqualified persons.

If automobile manufacturers betray consumers’ confidence, they will not be able to stay in business. Each auto company should seriously reflect on the series of scandals and tighten its lax discipline.

(From The Yomiuri Shimbun, Oct. 7, 2018)Speech


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