BMW Offices Raided by Authorities in Emissions-Cheating Investigation

https://www.nytimes.com/2018/03/20/business/energy-environment/bmw-diesel-emissions.html

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FRANKFURT — Prosecutors in Munich searched BMW’s headquarters on Tuesday as part of their continuing investigation into an emissions-cheating scandal that has badly damaged other German carmakers.

BMW, which is known for its sporty luxury cars, had until recently been relatively unscathed by the matter, which has cost Volkswagen billions of dollars, prompted investigations of the luxury carmaker Daimler and depressed sales of profitable diesel models across Europe.

The raids on Tuesday, in which about 100 investigators targeted BMW offices in Munich and an engine factory in Austria, suggested that all of Germany’s top domestic automakers may have evaded emissions rules, although perhaps not to the same degree as Volkswagen.

If so, the risk to Germany’s car industry, and to the nation’s broader economy, would increase sharply. Motor vehicles are the country’s largest export product, and BMW, Daimler’s Mercedes-Benz division, and Volkswagen’s Audi and Porsche units dominate the global market for luxury cars, where brand image is a crucial ingredient.

Munich prosecutors said in a statement that they were investigating whether the software in some BMW diesel models functioned like so-called defeat devices, cranking up pollution controls when a car’s engine computer detects an emissions test in progress and allowing excess exhaust under real-world conditions.

BMW said on Tuesday that the software that prompted the raids had been installed by mistake, and that the company had not intentionally tried to deceive regulators. None of the vehicle models at issue are in the United States, BMW said.

“In the course of internal testing, the BMW Group realized that a correctly developed software module had been allocated in error to models for which it was not suited,” the company said in a statement.

BMW said it would recall about 11,400 cars containing the software to fix the problem, a minuscule number considering that Volkswagen has admitted to installing emissions-cheating software in 11 million vehicles around the world.

BMW has nonetheless been stained by the scandal. The company, joined by Volkswagen and Daimler, provided funding for experiments on monkeys that were intended to show that diesel exhaust is not as harmful as many scientists have said. The research caused a furor after The New York Times reported it in January.

The investigations of German carmakers are chipping away at the companies’ reputations and draining resources that would preferably be spent on developing new products. Public hostility toward automakers is growing in Germany, as they find themselves being blamed for poor urban air quality caused by diesel exhaust.

This month, prosecutors in Braunschweig, Germany, conducted the latest in a series of raids at Volkswagen’s headquarters in nearby Wolfsburg.

The authorities were seeking evidence on whether Volkswagen had made false claims about the carbon dioxide emissions of its vehicles, Klaus Ziehe, a spokesman for the Braunschweig state’s attorney, said on Tuesday. The raids were first reported by Wirtschaftswoche, a German magazine.

Daimler, based in Stuttgart, has disclosed that it is under investigation by German prosecutors and by the United States Justice Department and Environmental Protection Agency. The authorities may conclude that Daimler vehicles sold in the United States were equipped with illegal emissions software, Daimler said in its 2017 annual report, which was published last month.

“Daimler could be subject to significant monetary penalties,” its report said, adding that it could suffer “significant collateral damage including reputational harm.”

The BMW vehicles being scrutinized are the 750d, a diesel model that is part of the top-of-the-line 7 Series, and the M550d, a diesel variant of the 5 Series line. BMW said it would begin recalling the vehicles to fix the software as soon as German regulators approved the appropriate repair.