Investigation Targeting Leading Companies by Prosecutors of Both Countries
[Asia Economy Reporter Kim Hyung-min] A wave of correction is sweeping through the automobile industries of Korea and Germany. Prosecutors from both countries have launched investigations targeting the leading automobile companies of the other, showing signs of escalating into an international conflict.
According to the legal community on the 30th, Korean prosecutors are currently deliberating whether to reopen investigations into the emission manipulation cases involving German Mercedes-Benz and Porsche. The Seoul High Prosecutors' Office is reviewing an appeal filed on the 16th by the civic group ‘Consumer Sovereignty Citizens' Meeting,’ which requests overturning the Seoul Central District Prosecutors' Office’s decision not to indict the two companies and to order a reinvestigation. Previously, on the 26th of last month, the Seoul Central District Prosecutors' Office dismissed the charges against Mercedes-Benz and Porsche for allegedly manipulating emissions between 2012 and 2018, citing ‘no charges.’ The Consumer Sovereignty Citizens' Meeting claimed that the Central District Prosecutors' Office conducted a sloppy investigation. A representative from the Seoul High Prosecutors' Office told this publication, "Depending on the case details, it may take more than a month for the High Prosecutors' Office to reach a decision." If the Seoul High Prosecutors' Office decides to reopen the investigation, it could coincide with the timing of the German prosecutors' investigation into Hyundai Motor and Kia, potentially escalating into a ‘national-level conflict.’
Mercedes-Benz
On the 29th, the Frankfurt Prosecutor's Office in Germany conducted a large-scale raid on eight offices of Hyundai Motor and Kia located in Germany and Luxembourg. The Frankfurt Prosecutor's Office suspects that Hyundai Motor and Kia received illegal emission manipulation devices from German parts suppliers BorgWarner Group’s Bosch and Delphi, installed them on 210,000 diesel vehicles, and sold them until 2020. With over 180 personnel mobilized, the forced investigation is seen as an extension of the ‘Dieselgate’ investigation that began in 2015. Since that incident, the German Federal Motor Transport Authority has conducted intensive investigations into emission manipulation targeting 16 automakers, including German car manufacturers. Among them, no specific actions had been taken against Hyundai Motor and Kia until now. It is believed that the current move aims to impose such measures. In September 2019, German prosecutors fined Daimler, the parent company of Mercedes-Benz, 870 million euros (approximately 1.144 trillion KRW) for diesel emission manipulation and neglecting supervisory duties.
There is also analysis that Germany has started to check and pressure Hyundai Motor and Kia. In May, Hyundai Motor and Kia sold 96,556 units in Europe, an increase of 9.8% compared to the same month last year. Hyundai Motor sales rose by 9.7%, and Kia by 9.8%. Despite an overall decline in the European market, Hyundai Motor and Kia’s sales increased. As of May, their combined market share rose to 10%, up 2.5 percentage points from the same month last year. In comparison, Audi Volkswagen Korea was prosecuted for importing and selling vehicles with manipulated emissions and was fined 1.1 billion KRW by the Supreme Court in January. The 77.6 billion KRW fine imposed on Mercedes-Benz by the Ministry of Environment in May 2020 was the largest ever in terms of amount.
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