 Germany feels heat in EU car coolant row Brussels (AFP) Dec 10, 2015 - The EU said Thursday it was taking court action against Germany for failing to force luxury automaker Daimler to use a new air-conditioning coolant deemed less likely to cause climate change. Temperatures have reached boiling point over the long-running coolant row that has seen Daimler, the Mercedes-Benz builder, claim the new refrigerant makes cars more likely to explode in a crash. Germany, Europe's top in car manufacturing, could face heavy fines if it is found to have infringed European Union laws. The decision adds to the pressure on a German auto industry that is already feeling the heat from a separate pollution cheating scandal that has engulfed carmaker Volkswagen. The European Commission, the powerful executive arm of the 28-nation EU, said in a statement that it had decided to refer Germany to the bloc's top court over the Daimler issue. "The Commission alleges that Germany has infringed EU law by allowing the car manufacturer Daimler AG to place automobile vehicles on the EU market that were not in conformity with the (mobile air conditioning) directive, and failing to take remedial action," it said. The EU warned Germany in September 2014 that it could end up in court if it did not act. "Despite contacts between the Commission and the German authorities in the context of the infringement procedure, Germany has not taken any further steps," the European Commission said. - R134a or R1234yf? - Since 2013 EU regulations have demanded that car makers use a refrigerant called R1234yf on the grounds that it produces far less greenhouse gases than older coolants. But Daimler is sticking to an older substance, called R134a, as it claims studies show the new one catches fire more easily and puts cars at a greater risk of explosion in case of a crash. The makers of R1234yf, US chemicals giants Dupont and Honeywell, reject Daimler's claims. Germany gave the auto giant special permission to keep using the older coolant, despite initial approval of the new one by the German Automakers Association, VDA, of which Daimler is a member. The EU warned Germany in September 2014 that it could end up in court if it did not act. "Despite contacts between the Commission and the German authorities in the context of the infringement procedure, Germany has not taken any further steps," the European Commission said. Brussels dismissed Daimler's claims about the inflammability of the new coolant. "These concerns were not shared by any other car manufacturer," it said, adding that they were also rejected by the German auto authority and the European Commission. The case has caused tensions between Germany nd other countries on the continent over the way that the auto industry is regulated. France's government controversially banned the sale of the latest models of some top-end Mercedes cars in July 2013 because they contain the old coolant. The EU initially backed France and other countries supported an EU-wide block on the cars, but a French court overturned the ban a month later.
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Volkswagen said Thursday the roots of its massive pollution-cheating scandal go back to 2005, and while the current situation was difficult, it would not break the company.
At a news conference to present the latest developments in the auto giant's investigation into the affair, VW supervisory board chief Hans Dieter Poetsch and chief executive Matthias Mueller said evidence suggested the scam was the work of just a small group of engineers.
There was "no evidence to suggest that supervisory board members or management board members are implicated," Poetsch said.
VW was plunged into its deepest-ever scandal in September, when it was forced to admit it had installed emission-cheating software into 11 million diesel engine vehicles worldwide.
The revelations sent shockwaves through the world's auto sector and there were fears the scandal could also hit the wider German economy.
The costs facing VW, once seen as the paragon of German industry, are still incalculable, not only in terms of reputation and global earnings, but with regard to the potential billions in possible fines and legal costs as well.
- Earnings target unchanged -
CEO Mueller, brought in to resolve the crisis, said VW was "currently doing everything it can to limit the effect the current situation has on its business performance."
But the group was sticking to its latest targets.
"Overall, the situation is not dramatic, but, as was to be expected, it's tense," said the 62-year-old.
"Although the current situation is serious, this company will not be broken by it," he insisted.
Supervisory board chief Poetsch said the scam was "not attributable to a one-off error, but an unbroken chain of errors," dating back to 2005, when VW launched a massive new campaign to sell diesel engine vehicles in the United States.
VW, which had looked set to overtake Toyota this year as the world's biggest carmaker in terms of sales, confessed to systematically fitting so-called defeat devices into its diesel cars in order to meet the rigorous emission standards in the US.
Defeat devices are sophisticated software designed to turn on pollution controls when the car is undergoing testing, and turn them off when the car is back on the road, allowing it to spew out harmful levels of nitrogen oxide.
US authorities had been alerted to VW's cheating practices by a non-profit group called the International Council on Clean Transportation.
A slew of different investigations, both criminal and regulatory, followed in a number of different countries, all of which are still ongoing.
VW too launched internal and external inquiries of its own.
- Too early to name culprits -
Mueller and Poetsch said it was still too soon to pinpoint exactly who were the masterminds behind the scam.
But VW has said that around 50 employees have come forward so far to testify. The carmaker employs a global workforce of around 600,000.
Eight employees have been suspended. The head of development at VW's luxury brand Audi, Ulrich Hackenberg, had been rumoured to be among those responsible. His departure was announced by the carmaker last week, but VW did not provide any reason.
Mueller's predecessor, Martin Winterkorn, also took his hat, even if he insisted he knew nothing of the scam.
The auto giant has drawn up the battle plans for a massive recall operation for the millions of cars affected, with the necessary remedial action ranging from a simple software update in some cases to the insertion of new hardware in others.
- Off the hook on CO2 -
VW was nevertheless afforded some welcome respite from its woes this week, when it said that allegations it had lied about the carbon emissions of some of its cars had proven to be unfounded.
In addition to the manipulated engine software, VW admitted in November that "inconsistencies" had been uncovered on its cars' carbon emissions.
Carbon dioxide or CO2 is a greenhouse gas which traps heat from the sun and is blamed for man-made climate change. And tackling CO2 is becoming a rising priority in many countries, especially in Europe, where cars are often taxed according to their carbon emissions.
But "extensive" investigations had shown that the carbon emission values were largely correct and that there would be no consequences for customers, VW said.
That news had pushed VW shares up strongly on Wednesday. And by late afternoon in Frankfurt on Thursday, they were showing a gain of 0.53 percent in a slightly firmer market.
maj-spm/boc
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