The Frankfurt state prosecutor's office announced earlier this week that police raided Hyundai and Kia over allegations that they put over 210,000 diesel vehicles on the road with suspected illegal defeat devices.
The announcement pushed shares of the two South Korean automakers down more than 6 per cent on Wednesday, with investors fearful that the inquiry would be expanded and punitive damages imposed.
Defeat devices are mechanisms or software that can alter car emissions levels, sparking debate on whether manufacturers employ them to conceal the true pollution levels of their vehicles. Volkswagen confirmed in 2015 that it used software to cheat pollution tests on certain diesel engines in the United States.
According to the prosecutor's office, the engine software used by Hyundai and Kia is suspected to have come from parts suppliers Bosch and Delphi, which is now owned by the Borgwarner company.
In an operation coordinated by the European Union agency Eurojust, authorities searched the commercial premises at eight addresses in Germany and Luxembourg.
A representative for Hyundai Motor Group in Seoul confirmed the raids and stated that the company was cooperating with authorities.
According to Kim Joon-sung, an analyst at Meritz Securities in Seoul, the inquiry may be widened or result in punitive penalties.
However, he claimed that no problems were discovered when all Hyundai and Kia diesel models sold in Europe were inspected for potential emissions manipulation in the mid-2010s.
Hyundai Motor and Kia shares were down 5 per cent and 4 per cent, respectively, as of 0435 GMT, trailing the market's 1.5 per cent decrease.
(Source:www.asia.nikkei.com)
The announcement pushed shares of the two South Korean automakers down more than 6 per cent on Wednesday, with investors fearful that the inquiry would be expanded and punitive damages imposed.
Defeat devices are mechanisms or software that can alter car emissions levels, sparking debate on whether manufacturers employ them to conceal the true pollution levels of their vehicles. Volkswagen confirmed in 2015 that it used software to cheat pollution tests on certain diesel engines in the United States.
According to the prosecutor's office, the engine software used by Hyundai and Kia is suspected to have come from parts suppliers Bosch and Delphi, which is now owned by the Borgwarner company.
In an operation coordinated by the European Union agency Eurojust, authorities searched the commercial premises at eight addresses in Germany and Luxembourg.
A representative for Hyundai Motor Group in Seoul confirmed the raids and stated that the company was cooperating with authorities.
According to Kim Joon-sung, an analyst at Meritz Securities in Seoul, the inquiry may be widened or result in punitive penalties.
However, he claimed that no problems were discovered when all Hyundai and Kia diesel models sold in Europe were inspected for potential emissions manipulation in the mid-2010s.
Hyundai Motor and Kia shares were down 5 per cent and 4 per cent, respectively, as of 0435 GMT, trailing the market's 1.5 per cent decrease.
(Source:www.asia.nikkei.com)
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