BMW Braces For 'Significant Fine' Despite Denying Emissions Cheating
BMW has set aside over $1 billion to cover anticipated fines from EU antitrust regulators.
German automaker BMW has acknowledged the possibility of an upcoming "significant fine" issued by European Union antitrust regulators. The news comes after BMW was named alongside Volkswagen and Daimler, accused of colluding to purposely stymie the progress of emissions reduction in vehicles sold throughout Europe.
"[F]ollowing its review of the Statement of Objections, the BMW Group will recognise a provision, which is likely to exceed €1 billion," said the automaker in a press statement. At the time of writing, BMW's cash reserve for the fine equates to around $1.13 billion.
Despite preparing for the fine, BMW is holding steady on its stance that it categorically rejects emission cheating, as well as all other allegations set forth by the EU Commission. The automaker plans to fight the allegations through all legal means necessary.
On Friday, European regulators accused BMW, Daimler, and Volkswagen of colluding to deny "consumers the opportunity to buy less polluting cars" by deliberately designing its Selective Catalytic Reduction systems (specifically, its AdBlue dosing strategies) to be limited in its effectiveness.
The European Commission's fine could account for up to 10 percent of BMW's annual global revenue. Due to the anticipated cost, BMW says that it estimates a significant impact on its yearly earnings. It has since revised its estimated Earnings Before Interest and Tax (EBIT) margins from 6 to 8 percent to as low as 4.5 percent (between 1 and 1.5 percentage points less). BMW's shares fell around 3 percent during U.S. trading hours on Friday following the news.
According to Reuters, alleged co-conspirator Daimler is not expecting to face any fines, given its whistleblower status in the case. Volkswagen has not issued an official statement on its earnings, stating that it would investigate the allegations before making further comment.