Germany fines BMW $9.6 million over diesel emissions

The number of vehicles showing irregularities in BMW’s case is far smaller, at just under 8,000. (AFP)
Updated 25 February 2019

Germany fines BMW $9.6 million over diesel emissions

  • Authorities had been probing BMW since early 2018 over suspicions it could have built a so-called ‘defeat device’ into some diesel cars
  • The number of vehicles showing irregularities in BMW’s case is far smaller, at just under 8,000

FRANKFURT AM MAIN: German prosecutors said Monday they had fined high-end carmaker BMW €8.5 million ($9.6 million) over diesel cars with higher harmful emissions than allowed, while adding the infraction was down to error rather than deliberate fraud.
“Munich prosecutors have ordered a fine of €8.5 million for the administrative offense of negligence in quality control,” investigators said in a statement.
Authorities had been probing BMW since early 2018 over suspicions it could have built a so-called “defeat device” into some diesel cars.
Such technologies allow the vehicle to reduce emissions under test conditions, while emitting far higher levels of pollutants such as nitrogen oxides (NOx) on the road.
In Germany, Volkswagen has paid one billion euros in fines over defeat devices following its 2015 admission that it installed them in 11 million cars worldwide, while high-end subsidiary Audi has paid €800 million.
And last week, prosecutors in Stuttgart said they had opened a “fine proceeding” against Mercedes-Benz maker Daimler over the same suspicions relating to 700,000 cars.
But the number of vehicles showing irregularities in BMW’s case is far smaller, at just under 8,000.
Prosecutors said that they believed “mistaken labelling of the part of the motor control software responsible for exhaust treatment” was behind increased on-road emissions.
“Extensive investigations” had found neither evidence of a purposely designed defeat device, nor of intent to commit fraud by BMW employees, they added.
Rather, “the company had not set up an appropriate quality control system” that could have prevented the error or revealed it after the fact, the prosecutors found.
In its most recent financial data release, BMW said it made a net profit of €1.4 billion between July and September, down 24 percent year-on-year as it contended with tough new emissions tests in the European Union.


WEEKLY ENERGY RECAP: Keeping things in balance

Updated 08 December 2019

WEEKLY ENERGY RECAP: Keeping things in balance

  • The over-compliance will result in cuts of 1.7 million bpd

Brent crude rose above $64 per barrel after OPEC+ producers unanimously agreed to deepen output cuts by 503,000 barrels per day (bpd) to a total 1.7 million bpd till the end of the first quarter of 2020.

The breakdown is that OPEC producers are due to cut 372,000 bpd and non-OPEC producers to cut 131,000 bpd.

Current market dynamics led to this decision as oil price-positive news outweighed more bearish developments in the US-China trade narrative that has weighed on oil prices throughout the year, with US crude exports rising to a record 3.4 million bpd in October versus 3.1 million bpd in September.

OPEC November crude oil output levels at 29.8 million bpd show that producers were already overcomplying with its current 1.2 million bpd output cuts deal by around 400,000 bpd. 

The over-compliance will result in cuts of 1.7 million bpd, especially when Saudi Arabia continues to voluntarily cut more than its share.

This makes the agreed 1.7 million bpd output cuts pragmatic since it won’t taken any barrels out of the market.

It isn’t a matter of OPEC making room in the market for other additional supplies from non-OPEC sources, as OPEC barrels can’t be easily replaced.

Instead, this is about avoiding any oversupply that might damage the global supply-demand balance.

Saudi energy minister Prince Abdulaziz bin Salman has effectively kept his promise and managed to smoothly forge a consensus among OPEC and non-OPEC producers.

He has also successfully managed the 24-country coalition of OPEC+ including Russia in reaching an agreement.

Despite suggestions otherwise in recent coverage of the Vienna meeting, the deeper cuts announced on Friday have nothing to do with the Aramco IPO. Let’s remember this meeting was scheduled six months ago and the IPO has been in the works for much longer.

The Aramco share sale did not target a specific oil price. If that was a motivating factor it could easily have chosen another time.