BMW halts project talks after Daimler blew whistle

A used BMW 650 luxury automobile stands outside a Bayerische Motoren Werke AG showroom in Berlin, Germany, on July 26, 2017.
A used BMW 650 luxury automobile stands outside a Bayerische Motoren Werke AG showroom in Berlin, Germany, on July 26, 2017. PHOTO: BLOOMBERG

BMW has suspended talks with Daimler on future cooperation projects after its rival disclosed alleged collusion among German carmakers to cartel authorities, Sueddeutsche Zeitung reported on Tuesday, citing industry sources.

BMW's top management plans to critically question future cooperation with Daimler on joint purchasing of auto parts and efforts to develop charging stations for electric cars, the daily newspaper said.

The project to develop charging sites for zero-emission cars, also involving Volkswagen and Ford's European division, is now facing delays but will be continued, Sueddeutsche Zeitung said.

Daimler's move to blow the whistle on a possible auto-industry cartel between the Stuttgart-based carmaker, Volkswagen, BMW, Audi and Porsche, alleging collusion on pricing and technologies, "has totally damaged" BMW's trust in Daimler, the newspaper cited an industry source as saying.

In a conference call with reporters on Wednesday, Daimler's chief executive officer Dieter Zetsche said he hasn't conferred with his BMW counterpart, Mr Harald Krueger, in the past seven days, but that he expects existing cooperation pacts with peers to continue.

"I've not spoken to him and I've not received any information that on other levels there have been any signals of this speculative nature," Mr Zetsche said, referring to reports that BMW has suspended talks on new projects.

Though both BMW and Daimler have for years competed with Volkswagen's Audi division for the luxury sales crown, there has been media speculation that they may combine their car-sharing services to better compete with US rival Uber.

European Union and German antitrust regulators are investigating whether BMW, Volkswagen, Porsche, Audi and Mercedes-Benz owner Daimler held meetings to discuss suppliers, prices and standards to the disadvantage of foreign carmakers.

The supervisory boards of Daimler and Volkswagen will meet on Wednesday to discuss the allegations about anti-competitive behaviour among the German carmakers, sources have said.

Volkswagen supervisory board member Olaf Lies, representing the No. 2 stakeholder Lower Saxony, criticised top management for failing to inform the controlling panel about the decision to provide early evidence to antitrust authorities, regional broadcaster ffn radio reported on Tuesday.

"At the moment I cannot understand this," Mr Lies was quoted by ffn radio as saying in an interview. "We are having this checked in a legal way whether it (prior notification) would have been necessary." Meanwhile, Daimler is conducting a thorough investigation into allegations of diesel cheating.

The maker of Mercedes-Benz cars is keen to shore up diesel, which powers many of its lucrative sport utility vehicles and big sedans as well as its trucks, vans and buses.

The manufacturer is counting on diesel while it invests in lowering the price and increasing the range of battery-powered cars to meet increasingly tough environmental regulations. 

"Diesel is worth fighting for," Mr Zetsche said.

Still, in his first public comments since allegations of decades-long collusion with other German carmakers surfaced last week, he largely steered clear of the topic beyond bemoaning the string of bad news hitting the industry.

"The car industry is currently causing headlines, and they're not good ones," said Mr Zetsche on a conference call with reporters.

"I know a lot of people want more clarity now, but we can't comment on speculation."

The possible antitrust violations, which emerged from a report in Der Spiegel on Friday, opened another set of challenges, which also include the threat of diesel driving bans, industrywide recalls rooted in Volkswagen's emissions-cheating scandal and heavy investment burdens to develop self-driving electric vehicles. 

Carmakers' fight for diesel goes beyond holding on to a tried-and-tested technology.

Until consumers finally buy electric vehicles, manufacturers need diesel as it generates about a fifth less greenhouse gases than comparable petrol engines.

Otherwise, the companies will not meet Europe's tightening emissions standards and face paying fines as of the start of the next decade.

"We're convinced, like the rest of the carmaking industry, that we're headed towards electric mobility," Mr Zetsche said.

"Until that happens, further reductions in CO2 we'll be achieved through combustion engines, and here the diesel will play a significant role."


A version of this article appeared in the print edition of The Straits Times on July 29, 2017, with the headline 'BMW halts project talks after Daimler blew whistle'. Print Edition | Subscribe