BMW's Defense Striking a blow for diesel engines

Not implicated in the Dieselgate emissions scandal, luxury carmaker BMW still warns of its potential costs.
No longer everybody's darling. Picture source: DPA

German carmakers are so worried about the besmirched image of diesel engines that even BMW, which has so far not faced any accusations over emissions manipulation, has rallied to the defense of rivals Volkswagen and Daimler with a plea to “stop rubbishing” the technology.

Harald Krüger, BMW's chief executive, on Thursday used the company’s annual general meeting in hometown Munich – which could soon see a city-center ban on diesel – to call for an end to debates unnecessarily “unsettling” current and potential owners of diesel-powered cars.

Volkswagen late 2015 admitted to installing “cheat software” to manipulate nitrogen-oxide emissions values in diesel vehicles and to date has agreed to pay some $25 billion in the United States to settle the scandal. Other European automakers have come under scrutiny since then - Daimler is being investigated by German prosecutors.

 

The controversy has been intensified in Germany by reports about excessive nitrogen-oxide emissions stemming from diesel engines. In Munich, a court recently threatened to ban diesel engines next year if emissions levels fail to improve, and in Stuttgart, home to Daimler and its Mercedes-Benz brand, authorities are considering a similar move.

The talks in Stuttgart between the state government of Baden-Württemberg and car-industry representatives have come to focus on retrofitting older “Euro 5”-class diesels, which were built until August 2014 and have proved the most troublesome in terms of emissions.

Should the carmakers have to pay for the upgrades – priced at €1000-3000 ($1087 to $3260) per car by industry sources – VW, Daimler and BMW could be saddled with costs running into billions of euros.

Ironically, with some 71 percent of new BMWs sold being diesel-powered, the Munich-based company could end up facing the heftiest costs of all – and possibly in more ways than one.

An additional danger, as Mr Krüger told BMW shareholders on Thursday, was that the talks about banning diesel cars could dissuade consumers from buying the newer and emissions-compliant “Euro 6”-class diesel, switching back to petrol-engine cars instead.

“There’s a catch with all of this: If you ban diesel, you end up with more carbon-dioxide [emissions],” Mr. Krüger said. “Without modern diesel engines, the EU’s 2020 carbon dioxide emissions goals will prove illusory.” To reach this target, the EU has given each carmaker an individual target for the carbon-dioxide emissions of its fleet. Companies that fail to hit their five-year goals – say because customers switch from diesel to petrol – face steep fines.

Markus Fasse specializes in aviation and automobile industry news and works from Handelsblatt's Munich office. [email protected]