European stock markets set to run up a loss for the week

25 Sep 2015 | Author: | No comments yet »

BMW Shares Recover in U.S. After Magazine Clarifies Report.

BMW AG jumped in U.S. trading after German magazine Auto Bild said it has no indication the carmaker manipulated emissions tests, clarifying its earlier report on the X3 sport utility vehicle.

Shares in the top-of-the-range carmaker BMW fell nearly 10 per cent on the Frankfurt stock exchange on Thursday on a newspaper report that one of its diesel models exceeded EU emission norms.BERLIN – Some diesel cars of high-end automaker BMW produce dangerous gases that exceed EU anti-pollution limits by up to 11 times, German weekly Auto Bild reported Thursday.The reverberation of the Volkswagen tailpipe emissions scandal is still being felt across the industry, pulling other brands under the harsh light of scrutiny. According to a report out from Germany’s Auto Bild, the Nitrous Oxide (NOx) tailpipe emissions of BMW’s X3 diesel compact crossover exceed European regulations.

Even if there were no signs that BMW had also used sophisticated softwares as Volkswagen to fool pollution tests, the news further destabilised the vital German industry already shaken by the VW bombshell. It quoted road tests carried out by the International Council on Clean Transportation (ICCT) which found that BMW’s X3 xDrive equipped with 20d diesel motors produce gas emissions that are 11 times higher than European limits.

In fact, the car’s respiratory-harming NOx emissions exceeded future Euro 6 emissions levels — set to go into effect in 2017 — by as much as 11 times. By contrast, VW shares shot up 7.9 per cent to hit an intraday high of 120.30 euros, as investors went bargain hunting following the meltdown in the share price earlier this week as the extent of the scandal became apparent. The ICCT had been at the origin of the stunning revelations of cheating by Volkswagen, which went public last Friday when the United States announced a probe. Meanwhile, the AFP reported that European stock markets closed lower Thursday following another volatile day of trading, as a spreading Volkswagen scandal offset positive German data. BMW quickly responded to the report saying, “The BMW Group does not manipulate or rig any emissions tests.” Adding, “We observe the legal requirements in each country.” The findings of the ICCT is damaging not just for BMW but rather the entire global diesel market, as the X3 diesel features a ‘urea treatment’ system believed to curb tailpipe emissions.

Investors were also awaiting an update on the outlook for US interest rates, with the euro up against the dollar ahead of a speech later in the day from Federal Reserve chief Janet Yellen. Volkswagen has admitted to installing software designed to circumvent regulations by turning on full emissions controls only when the car detects it’s being tested.

Two other studies by ICCT showed that BMW’s X5 SUV and 13 other BMW vehicles tested comply with legal requirements on emissions of lung-irritating nitrogen oxides, BMW said. Volkswagen, which has lost more than 20 billion euros ($22.5 billion) in market value this week, closed unchanged. “There’s no suggestion BMW has done anything illegal,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “However, there are concerns for the long-term damage on the business with diesel cars.” Auto sales of the BMW namesake brand with diesel engines last year made up about 38 percent of total deliveries, roughly in line with diesel-car sales at other manufacturers, the company said.

The European Union currently allows manufacturers to optimize results with tactics such as stripping the car of excess weight or removing the air conditioner, according to Tuev Sued, a German company that performs tests for carmakers. Such strategies have contributed to a widening gap between reported results for diesels and the pollution that really comes out of their tailpipes, according to the European Commission, the regulatory arm of the EU.

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