Dieselgate Product Of Vast VW-BMW-Daimler Car Cartel Conspiracy, Fresh Report Says

Thrugelmir

Not good news for the German car industry. Nor well timed.

Two years ago -- the dieselgate scandal just started to unfold -- I recommended to dig deeper, and to dig elsewhere in the industry than just Volkswagen, because having worked in said industry, I knew that dieselgate is everywhere. Everybody in the industry knew it, but nobody talked. In America, dieselgate-cheaters are behind bars, while in Europe, emissions cheating is treated as a lesser offense than illegal parking: Not a single fine was handed out in Europe. Today, peccadillo suddenly morphed into a monstrous antitrust case, when it became known that dieselgate is the product of a secret cartel far beyond Volkswagen. “Audi, BMW, Daimler, Volkswagen, and Porsche colluded for years in more than 1000 meetings,” wrote Der Spiegel [German, paywall] today.

Germany's Handelsblatt has a similar report. EU antitrust regulators confirmed investigations, Reuters wrote.

The dieselgate scandal never was as simple as the common good prevailing over the villain Volkswagen. Today, we may begin to understand the true enormity of a scandal that involves a cabal of carmakers and politicians. I said begin, because the scandal is way too big to wrap our heads around it in one go.

For two decades, more than 200 managers and engineers of five large German automakers met in 60 different task forces to coordinate “the development of cars, costs, suppliers, and markets,” wrote der Spiegel. “They cooperated in secrecy, as closely as one would expect it from the divisions of one company, of a German Auto Inc – or a cartel.”

According to the report, the cartel colluded on everything from the soft-top of a convertible to the assessment of suppliers. The German Five also agreed on the size of the urea, or AdBlue tank.

The diesel engine was Europe's answer to CO2 curbs. Diesel also was an answer to a Japanese threat, says Der Spiegel. Toyota lowered consumption and CO2 with its hybrid engine. Diesel also is more efficient, and therefore produces less CO2. At the same time, the diesel engines makes something much nastier: Nitrogen Oxide (NOx) a gas that leads to the premature death of 72,000 people per year, as the European Environmental Agency said. NOx can be neutralized with AdBlue. The liquid needs a tank, and the bigger the tank, the more money it costs. If automakers would agree on a moderately sized AdBlue tank, they could save “up to 80 EUR [$93] per vehicle” the minutes of one of the secret meetings are quoted. When you make 10 million cars a year, those 80 Euros quickly turn into real money.

In 2006, the secret committees agreed to do something about the tanks and the expense, and in 2008, something was done. “After several meetings, telephone calls, and emails, Daimler, Audi, BMW, and VW agreed in September 2008 on an 8 liter tank for all vehicles.”

The trouble was: if the nasty NOx is properly neutralized, that 8 liter tank did last for not more than 3,700 miles. To last the usual 10,000 miles between oil changes, “a tank of at least 19 liters” would be needed, Der Spiegel quoted a document authored by Audi. The document noted that “Daimler, VW, and BMW concur.”

A few years later came stricter regulations both in Europe, and the U.S. , requiring more AdBlue. “Nobody had the obvious idea to mount bigger AdBlue tanks,” notes the report. Just the opposite happened: Audi warned against an “arms race of tank sizes, which we should continue to avoid.”

igger tanks were not needed, says the report, because automakers “had long started to dupe regulators and customers about the true emissions of the cars.” Once cars were out of the testing labs, exhaust treatment was mostly turned off, sparing customers the AdBlue hassle, and OEMs the expense for bigger tanks.

That Germany’s automaker association VDA organized sundry task forces was no secret in the industry. “It is possible that this spawned backroom deals between a smaller group with the intent to make the best out of the very porous laws,” said often quoted car professor Ferdinand Dudenhöffer in German television. “It is quite possible that those cartels exist.”

Interestingly, VDA members Ford and GM’s Opel were not invited into the back rooms. A former R&D chief of Ford Germany told me recently that his bean counters kept bugging him about the smaller and cheaper AdBlue tanks of the German competition. He had no answer.

The scandal became a matter of record when, on July 4 2017, Volkswagen made, says Der Spiegel, “some kind of a voluntary disclosure” to Germany’s Federal Cartel Office and the EU Commission, alleging “involvement in presumptive antitrust violations.” Daimler also reported itself to the authorities, the report says.

Volkswagen and Daimler did not come clean due to a sudden pang of conscience. Indications of a car cartel transpired when the cartel office tracked a steel cartel and raided six companies. The impounded documents led to the car conspiracy. Somehow, Volkswagen and Daimler received wind of the authorities being on their case, and they raced to get into the good graces of the investigators.

According to Der Spiegel, Volkswagen hopes to get away scot-free by cooperating with the government. So does Daimler, “and only the authorities know who was faster in the high art of self-incrimination.” In cases like these, who first rats out the other conspirators can get away with a lesser sentence, or none at all. There is no leniency for being second. Companies found guilty of breaching EU cartel rules face fines of as much as 10 percent of their global sales, wrote Reuters. On 2016 sales revenue of 217.3 billion, Volkswagen is looking at fines approaching 22 billion EUR ($25 billion). Daimler's group revenue was 153.3 billion EUR in 2016, BMW's 94.2 billion EUR.

The conspiring German Five did not sail blindly into an antitrust case. Documents and memos seen by Der Spiegel mention again and again that the meetings could collide with German and EU cartel law.

Germany's BILD Zeitung writes that prosecutors in Braunschweig (investigating Volkswagen) Munich (investigating Audi) and Stuttgart (investigating Daimler) "are very interested in the documents." So are prosecutors in the U.S. Germany's Rheinische Post wrote that Volkswagen CEO Matthias Müller is not worried about traveling to the U.S., and will do so in a few months. "There is no warrant out on me," Müller said. This could change. According to the report, the documents say that the slimmed-down AdBlue tank has been approved "at board level."

In Germany, the explosive case comes at a highly inopportune moment. Federal elections are looming in Germany, and dieselgate has turned into a political football ever since Germans started worrying that their beloved diesel cars could be locked out of inner cities.

For the two years since the dieselgate scandal became public, the German government has intently looked the other way. Government and auto industry “live in a common law relationship” in Germany, Jürgen Resch, head of the environmental lobby group DUH, once told the VDI Nachrichten, and it remains an often used quotation in Deutschland. The head of the VDA association, whose taskforces appeared to have spawned the secret backroom meetings, is Matthias Wissmann. He used to be Germany’s Minister of Transport.

“Intertwined politics and industry hurt Germany,” Dudenhöffer told me. “Ms. Merkel ringfenced the German auto industry, and it didn’t do it a favor. German laws and regulators are solely aimed at protecting the industry. This had to go wrong.”

The DUH activists, who were instrumental in getting the dieselgate football rolling way back in 2014, have long given up on trying to get German regulators end their inaction. The group has better luck in the courts, and diesel driving bans loom in 16 cities of Germany. Wrote Christiaan Hetzner in Automotive News:

“Almost 30 years ago, Volkswagen ads introduced the German term fahrvergnuegen to communicate driving enjoyment. But now, because of its cheating on diesel emissions tests, VW has unwittingly helped introduce a new, less flattering term: fahrverbote, or driving bans.”

“The diesel car sales share slipped to lowest level since start of diesel emissions scandal,” worried auto industry subscribers to the AID Newsletter could read in a recent issue. 52% of newly bought passenger cars were diesel powered in October of 2015. Last May, the diesel take rate was down to 45.1%, and there is no sign that it would end its “seemingly unwavering downhill slide,” as AID editor Matthias !!!!!!! put it.

Worried about a loss of power in Berlin, and a loss of sales in Wolfsburg, Stuttgart, Munich, and Ingolstadt, the common law partnership between government and auto industry recently switched from apathy to actionism. A month ago, headlines of a monster recall of 12 million diesel cars in Germany made the rounds, as “German lawmakers are flexing their muscles ahead of national elections on Sept. 24,” Reuters wrote. The threats worked: Last week, Daimler “voluntarily” recalled three million diesel cars in Germany, Audi “voluntarily” did the same with 850,000 cars. Daimler figures costs of around 70 EUR ($81) per car, which in a Daimler shop won’t buy much more than a pat on the head.

In two weeks, co-conspirators Volkswagen, Audi, Porsche, BMW and Daimler will confer with other automakers, unions, and politicians at a “diesel summit” in Berlin. Consumer or environmental groups are not invited. Under the cloud of “one of the biggest antitrust cases in the history of Germany’s industry,” as Der Spiegel calls the case of the car cartel, it should become an interesting meeting.

In rare three part harmony, BMW, Volkswagen, and Daimler did not want to "comment on speculations." Even that sounded pre-arranged.

https://www.forbes.com/sites/bertel!!!!!!t/2017/07/22/dieselgate-product-of-vast-vw-bmw-daimler-car-cartel-conspiracy-fresh-report-says/#4b2300117ce8

bugslet

Catching up with the truck manufacturers then

http://europa.eu/rapid/press-release_IP-16-2582_en.htm

The European Commission has found that MAN, Volvo/Renault, Daimler, Iveco, and DAF broke EU antitrust rules. These truck makers colluded for 14 years on truck pricing and on passing on the costs of compliance with stricter emission rules. The Commission has imposed a record fine of € 2 926 499 000.

kabayiri

A friend is working on the legal side of the effects of Black Carbon on road users and pedestrians.

He believes this will be as big a legal issue as smoking in years to come, and makes a powerful case for it.

We could easily see class action suits.

A_Medium_Size_Jock

I read what follows yesterday but was dissuaded by nonsense on another thread, so I desisted.

Volkswagen called a crisis meeting to discuss the enquiry it would appear:

The whiff of scandal around the German car manufacturing industry may be set to intensify, as Volkswagen prepares to hold a top-level meeting to discuss allegations that carmakers colluded to bring down the cost of components – including some used to control diesel emissions.

https://www.theguardian.com/business/2017/jul/24/vw-calls-crisis-meeting-to-discuss-eu-cartel-inquiry-source-says
That report also includes this:

The car industry argues it originally responded to incentives set by governments to develop diesel engines as a way of lowering overall carbon emissions to meet climate change targets. However, diesel emissions of nitrogen oxides have proved more harmful to people’s health.
The effects have come under increased scrutiny since Volkswagen admitted to using illegal software in its diesel engines to cheat emissions tests. The carmaker is set to pay more than $20bn in US fines and settlements.
Subsequent research has shown that real-world emissions in virtually all diesels are far higher than lab tests showed.

BMW are also denying any cheating:

BMW AG sought to defuse concerns about possible collusion with other German automakers by rejecting allegations of cheating on diesel emissions and downplaying talks with rivals as being focused on promoting exhaust-treatment technology in Europe.

https://www.bloomberg.com/news/articles/2017-07-24/bmw-denies-diesel-cheating-as-regulators-probe-broader-cartel

ChopperST

The other issue here is the software fix in the UK and Europe isn't fit for purpose and is destroying engine components due to the extra load on the EGR valves, injectors, turbos etc. There is also evidence to suggest that the "fix" actually does nothing to reduce the NOX emissions. Its amazing that we have let them get away with it despite the damning view of the select committee that heard from Paul Willis (CEO of VW UK) and essentially calling him a liar!

VW are trying to sweep it under the rug.

GreatApe

The solution is just to go back to euro 4 regulations

Diesel does offer a benefit to the consumer, lower per mileage costs for high mileage drivers.
The savings to the consumer must be weighed against the negatives and the negatives cant be BS like 'Nitrogen Oxide (NOx) a gas that leads to the premature death of 72,000 people per year' it has to be assessed truly and correctly.

To further prove the point that this is mostly political rather than real risk/benefit analysis. Buses/HGVs are allowed to emit ~120 x as much NOx as a car per mile. Also what about the little petrol generators street vendors and the like use. They will be hundreds or even possibly thousands of times worse. If the emissions really were anywhere near as bad as some of the agencies want to protray then why are those things not illegal?

GreatApe

ChopperST wrote: »

The other issue here is the software fix in the UK and Europe isn't fit for purpose and destroying engine components due to the extra load on the EGR valves, injectors, turbos etc. There is also evidence to suggest that the "fix" actually does nothing to reduce the NOX emissions. Its amazing that we have let them get away with it despite the damning view of the select committee that heard from Paul Willis (CEO of VW UK) and essentially calling him a liar!

VW are trying to sweep it under the rug.

Why not regulate to 1/1 billionth the current NOx levels and do the same for power stations?

We will save 74,000 lives a year, supposedly

That would force all cars to electric and all power to be generated by wind or pv

Fantastic

I would suggest diverting £30 billion annually from the NHS for this mission
We will ignore any deaths or hardship for the smaller NHS workforce and resources.

ChopperST

GreatApe wrote: »

Why not regulate to 1/1 billionth the current NOx levels and do the same for power stations?

We will save 74,000 lives a year, supposedly

That would force all cars to electric and all power to be generated by wind or pv

Fantastic

I would suggest diverting £30 billion annually from the NHS for this mission
We will ignore any deaths or hardship for the smaller NHS workforce and resources.

Feel better for that?

Not quite sure how any of that is relevant to my post TBH.

Electrification is the long term answer, with a slow move away from fossil fuels to battery tech maintained by renewables and nuclear. EVs will help balance the grid on a night time. Smart metering will encourage people to charge at times of low demand. Lithium cells can be recycled indefinitely and EV batteries can be repurposed for domestic applications. Or we could just keep burning dead dinosaurs a while longer and really screw our planet and let kids breathe in the pollutants from exhaust fumes in city centres forever?

worried_jim

It will all be resolved in just 23 years after today.

https://www.theguardian.com/politics/2017/jul/25/britain-to-ban-sale-of-all-diesel-and-petrol-cars-and-vans-from-2040

GreatApe

ilovehouses wrote: »

I'm completely aboard the good ship electrification.

The slight worry I have is that we'll be reliant on government policy to deliver the move towards non carbon sources of power. It wasn't so long ago government were scaring kids at school (well me anyway) about the impending ice age. Even more recently they were pushing us towards diesel - I think that's the Greatape's point - yesterday's experts were wrong; maybe today's are too.

Probably important to maintain our own home generation via solar and wind to gain some independence but the government could easily tax this out of existence should they wish.

The experts are very often wrong or just stupid or just have an agenda. For instance the damage done by coal plants is estimated using a value of about $10 million a life. Well a life is not worth $10 million no matter how much spin is put on it and once you start with a crazy stupid assumption all your further analysis is crazy stupid. So some crazy numbers devoid of any reality are used to scare people. An effluent tax a CO2 tax a NOx tax they are all reasonable in my mind but only if the sums charged represent reality of harm done which are probably pennies to the pound from the inflated fake BS

Worse yet at every step in the way there is a person who adds a margin of error adding needless cost and overhead. An example would be the chlorinated chicken, who before this week even knew !!!!!! that was but scare the public and the stupid politicians and a non issue becomes an issue. Or regulations for foundations of buildings, my 100 year old home would not meet modern regs for foundations but its been standing fine for 100 years so clearly the regulators are over inflating whats needed.

Anyway electrification will likely win out and that will be great

In the meantime its just stupid season for journalists who have no desire or understanding of a subject to become cheerleaders against it.

Its a bit like the anti vaccine people, same sort of fake news fake stats fake analysis to scare people into doing stupid things.

GreatApe

ChopperST wrote: »

Feel better for that?

Not quite sure how any of that is relevant to my post TBH.

Electrification is the long term answer, with a slow move away from fossil fuels to battery tech maintained by renewables and nuclear. EVs will help balance the grid on a night time. Smart metering will encourage people to charge at times of low demand. Lithium cells can be recycled indefinitely and EV batteries can be repurposed for domestic applications. Or we could just keep burning dead dinosaurs a while longer and really screw our planet and let kids breathe in the pollutants from exhaust fumes in city centres forever?

Diesel gate is BS. The harms are very likely extremely over stated. 70,000 deaths a year in the EU from diesel....yeh right when directly smoking tabaco into your lungs only kills 700,000 in the EU I am expected to believe diesel cars emitting lessor toxins at magnitudes lower concentrations is on the same order as tabaco smoking...

What should have happened was that a decade ago the euro manufacturers should have been honest and said to their regulators look its difficult to cut these pollutants down but their harms are manageable and the benefit to the consumer is greater than the harms. Don't push past Euro 4 or we will have to convert to petrol which will cost the continent much more in imported oil and consumers more in costs. The regulators and politicians would probably have said ok

The alternative would have been something like the regulators saying no and the EU fleet being more heavy petrol which would have cost maybe an additional 4 billion barrels of imported and burnt oil over the decade at a cost of maybe $200 billion in payments to the arabs and russia. Perhaps even worse than that as oil price is set on the margin. If without diesel oil demand would have been 1mbpd higher then not only would the EU have paid for 3-4 billion additional barrels but everyone in the world might have had to pay a few dollars more for their oil too.

few complicated topics can be fixed to one variable. less pollutants = good. Sure if you are 5 years old but what of the hundred other variables many of which = bad?