Korean Gov't Bans Operation of Uninspected BMW Vehicles

The Korean government banned on Aug. 14 the operation of the BMW cars that have not received safety inspections.

"The central government has requested the provincial governments issue an order to suspend the operation of uninspected BMW vehicles starting Aug. 15," Transport Minister Kim Hyun-mee said in an address to the nation on Aug. 14.

Once the owners of the uninspected BMW cars receive the order, they are obliged to suspend the operation of their cars and immediately get safety checks on them. They are only allowed to drive their cars for the purpose of the checks.

Kim Hyo-joon, chairman of BMW Group Korea, appealed on Aug. 13 to owners of BMW cars that have not undergone safety checks yet. "Please take your BMW cars to service centers for safety checks," he said. But his appeal failed to subdue their antipathy against BMW Korea.

According to the Ministry of Land, Infrastructure and Transport, 72,888 or 68% of about 106,000 BMW vehicles subject to the recall received safety inspections as of Aug. 13.

BMW Korea should complete safety inspections of the remaining 34,000 vehicles by the Aug. 14 deadline. As 61 BMW service centers nationwide can inspect about 10,000 units a day, owners of at least 14,000 BMW cars will have no choice but to follow the suspension order.

"About 73,000 vehicles have received safety inspections so far. We earnestly ask other BMW owners to have their cars checked for safety," chairman Kim Hyo-jun said in an emergency meeting on BMW fires held at the ruling Democratic Party. Kim met reporters shortly after the meeting and repeatedly stressed, "BMW owners ought to receive safety inspections on their cars as soon as possible.”

Meanwhile, the government is set to launch an investigation into the BMW case. If BMW Korea is found to have intentionally covered up a flaw in BMW cars which caused engine fires, the German carmaker will be slapped with a huge fine by the Ministry of Land, Infrastructure and Transport of Korea.

BMW Korea will have to spend a snowballing amount of money to cope with the disaster. The company already received a record 60.8 billion won in fine from the Ministry of Environment of Korea last year after it was found to have fabricated certificate documents.

If the inspection by the Ministry of Land, Infrastructure and Transport finds that BMW Korea has covered up a flow in BMW cars, BMW Korea will be slapped with a new record-high fine.

The Enforcement Ordinance of the current Automobile Management Act stipulates that a carmaker is subject to a penalty amounting to 1% of its sales if it finds a flaw in its cars that hinders safe operation and fails to rectify it without delay in accordance with the law.

Unlike other penalties, which range between one billion won and 100 billion won in amount, there is no upper limit for this one. BMW Korea posted 3,633.7 billion won in sales by selling 59,924 vehicles last year. The 106,000 vehicles being recalled this time are close to BMW Korea’s sales for two years. If the investigation finds that BMW Korea made a belated recall, a penalty of 70 billion won may be imposed on BMW Korea based on the number of recalled cars and sales volume.

On top of that, BMW Korea is providing rental cars to BMW owners receiving safety inspections. And some owners of BMW cars who suffered from engine fires are proceeding with a civil lawsuit. BMW Korea posted 8.1 billion won (US$7.2 million) in net loss last year due to penalty expenditure. Its loss is expected to increase this year.