BUSINESS

[KH Explains]Why are foreign carmakers manipulating emissions test documents in Korea?

By Kim Bo-gyung
  • Published : May 4, 2018 - 16:43
  • Updated : May 4, 2018 - 23:32
While German carmakers are facing investigation overseas over cheat devices, foreign carmakers operating in South Korea have been charged with different issues here: submitting falsified emissions test documents and selling vehicles without authorization.

The first round of government hearings in Korea on BMW Korea and Porsche Korea’s emissions results took place last week.

In an investigation by the Ministry of Environment and Korea Customs Service, BMW Korea was found to have falsified emissions documents, while Mercedes-Benz Korea and Porsche Korea sold vehicles without approval for new auto parts.

But behind such dramatic descriptions of their violations that made the news in recent week, the automakers say they have done little that is out of the ordinary.
 
Environment Minister Kim Eun-kyung (center, first row) observes vehicle emissions testing near the Sports Complex Station in Jamsil southeastern Seoul on April 20, which is designated as free emissions checkup day here. (Yonhap)

While admitting to “sloppy documentation,” the foreign carmakers contended that such a method of certification was customary here and that their vehicles do not exceed emissions standards.

And Seoul government officials, apparently, agree.

“None of the concerned models have actually been found to violate Korea’s emissions standards,” Kwon Young-mi, an officer in charge of manufactured vehicles at the Ministry of Environment, told The Korea Herald.

If so, why did foreign carmakers submit falsified test documents to local authorities?

“To my understanding they had manipulated documents because it is time-consuming to wait for headquarters to complete emissions testing on new vehicles in accordance with Korea’s standards,” Kwon said.

“South Korea requires emissions testing to be done with the heaviest model, while that is not the case in Europe. That is why emissions results for models sold in other countries can be problematic here.”

In line with the global trend, South Korea adopted self-authentication for vehicle emissions in 2009.

This means local and foreign carmakers would submit documents on emissions tests conducted at their headquarters. The National Institute of Environmental Research within the Ministry of Environment would look through the documents on each model for about 15 days, and an additional two days or so for vehicles selected to go through confirmation here.

“It is mandatory for vehicles to undergo re-authorization even when there are changes in one or two auto parts. Foreign carmakers chose to fabricate emission tests to cut down on cost and release new models ahead of competitors,” said Lee Ho-geun, a professor of automotive engineering at Daeduk University.

The different standards and consequent practices of resorting to shortcuts have led to significant penalties and damage to the brand image on the part of automakers.

In November 2017, the Ministry of Environment slapped BMW Korea with a 60.8 billion won penalty, the highest-ever levied on a single automaker, for falsifying emissions test results of 81,483 units across 28 models authorized between 2012 and 2015.

Mercedes-Benz Korea was fined 7.8 billion won for not receiving authorization for 8,246 units containing new auto parts, and Porsche Korea was ordered to pay a 1.7 billion won fine for the same reason.

In the following month, prosecutors raided Nissan Korea’s office for fabricating emissions and fuel efficiency of the Infiniti Q50 luxury sports sedan and Nissan Qashqai compact sport utility vehicle.

Following the worldwide emissions scandal of Volkswagen, Korea has now put into place tougher rules by revising the Clean Air Conservation Act, effective as of Dec. 27 last year, adopting heavier penalties.

“Prior to the revision, punishments for manipulated test results was relatively light. The ministry also turned a blind eye to fabricated results due to a lack of professionals assigned to look through piles of documents,” according to professor Lee.

Now, the government has vowed to step up the proportion of vehicles confirmed to 20 percent from the previous 3 percent, and implement an electronic document evaluation system in the second half of this year.

Regardless of the amount of emissions, a maximum 5 percent fine on the profit earned per problematic model will be imposed on vehicles that have been unlawfully certified or unauthorized from the previous 3 percent.

The penalty cap has also been raised to 50 billion won per model from 10 billion won.

Meanwhile, the automakers refrained from commenting on the details, other than admitting their documentation errors, but emphasized their vehicles are safe.

“We regret sloppy documentation. There are no technical or safety issues with the vehicles,” said the spokesperson of BMW Korea.

Mercedes-Benz Korea said, “We did not falsify results, but there were missing documents.”

Nissan Korea also said it would “cooperate with the local authorities to resolve the issue as transparently as possible.”

Porsche Korea did not respond when asked for comments.

Experts urged that in order for the past practices to be eradicated and for the revised environment law to serve its purpose, the government should be more thorough in their screening process.

“While (the imported auto companies) may have been legally at fault, it was widely customary. It is part of the process of market maturation, and also the side effects of compressed growth of the economy. Such (document manipulation) do not exist in countries such as the US, Germany or Japan cause they don’t tolerate such customary practice from the beginning,” said professor Kim Yong-jin of Sogang University, who also heads the Korean Academy of Motor Industry.

Professor Lee said, “Introducing a punitive penalty system implemented by the US could be one of the options. The punishment for (false documentation) is too light, even after the revision. The light penalty initially designed to protect Korean firms is now used by the importers.”

By Kim Bo-gyung (lisakim425@heraldcorp.com)