BMW Feels Volkswagen’s Burn as ‘Dieselgate’ Sweeps Through Germany
When it comes to the stock market and public perception, suspicion is often enough to tarnish a company’s image and dent its market value, wrong as it may be. BMW is experiencing that firsthand as it feels the burn of the Volkswagen “Dieselgate” scandal from its own corner of the German auto industry.
Following a September 24 Auto Bild report, which stated a BMW X3 diesel SUV performed poorly in road tests, company stock took an immediate hit in trading the same day on German exchanges. With Volkswagen stock down over 30% since the scandal broke, there is no telling what could happen to BMW in the coming weeks, despite the automaker’s insistence it did no wrong.
According to the report by the German outlet, the BMW X3 xDrive20d (a European model) exceeded its quoted fuel economy by 11 times in road tests done by a British institute, later analyzed by the International Council on Clean Transportation (ICCT). If verified, that performance would be worse than the Volkswagen Passat diesel models that were part of the scandal that emerged after the EPA’s findings. (In the United States, the BMW X3 xDrive28d serves as the nameplate’s diesel model.)
While Volkswagen sheds top executives and hyperbolic reactions continue circulating in the press — our favorite headline: “Volkswagen Broke America’s Heart” — the last thing an automaker needs is to be associated with the scandal. The Auto Bild report ensures BMW will have no such luck, despite the automaker’s claims it did not play the same distortion game VW is said to have done with emissions control software.
A spokesperson for BMW told Auto Bild there has been no tampering of emissions controls in the company’s vehicles and as of yet there have been no confirmations the X3 xDrive diesel vehicles should be included in the fracas that is humbling Volkswagen, the world’s top automaker by sales in 2015.
Yet investors hardly need proof when they consider what could be coming down the road for BMW, and a rapid selloff on German exchanges showed what suspicions could do when billions are at stake. After beginning the day near 82 euros, BMW stock lost over 10% by midday trading before evening out to 75.50 euros by the end of the session, a loss of 5% on the day.
Compared to the precipitous drop of Volkswagen stock since the news arrived, BMW has no reason to panic just yet, but the collateral damage of Dieselgate is only just beginning for automakers, especially those originating in Germany that happen to sell diesel models.
As for the reputation of “clean diesel” technology in the U.S., there’s no telling how far that stock will drop in the coming years. When it’s all said and done, we may end up with an auto fleet that is far less efficient without diesel making a dent in miles per gallon quotes.
Maybe Volkswagen should plunge forward with its impressive electric vehicle concepts after all.