WASHINGTON -- BMW's rise in the US has come with a little-known cost: record fines for violating fuel economy standards.
When the National Highway Traffic Safety Administration issues its annual report on corporate average fuel economy, or CAFE, it will show that BMW North America Inc. paid more than $42 million (about E34 million) in fines during the government's 2003 fiscal year. That year ran from October 1, 2002, to September 30, 2003.
The figure represents penalties of $14 million for BMW's 2002 model-year cars and $28 million for 2001, the automaker confirms.
Porsche Cars North America Inc. paid the second-largest fine in 2001: $5 million.
BMW's 2001 fine amounted to about $137 per car sold during that model year.
For the 1998 through 2002 model years, BMW paid CAFE fines of about $96 million. That's more than double the $43 million the automaker was penalized for the previous five model years.
The $28 million payment is the highest by any automaker in a year.
The previous largest payment was $20.5 million from Mercedes-Benz for 1987.
Cost of doing business
BMW has accepted CAFE fines as a cost of doing business. The Big 3 say meeting CAFE standards is part of good corporate citizenship.
BMW spokesman Gordon Keil says the automaker builds "the cars our customers want to buy."
Fast cars with superb handling and luxury features weigh more and use more fuel, Keil says. "If there are penalties, so be it," he says.
Others are discarding that view.
After Daimler-Benz AG bought Chrysler Corp. in 1998, executives said they intended to have their combined fleet meet CAFE standards.
NHTSA records show they are getting close. DaimlerChrysler told NHTSA it expected its imported cars, mostly Mercedes-Benz models, to average 27.1 miles per gallon or 8.7 litres per 100km in the 2004 model year. That would fall just short of the 27.5 mpg standard for cars.
BMW does not make the least fuel-efficient vehicles. But a limited product mix and rising sales create conditions for the penalty.
In 2001, the year of the $28 million fine, BMW sold about 204,000 cars that averaged 25.0 mpg. In 1997, when the automaker was fined $11.8 million, its fleet average was 25.7 mpg. BMW sold 131,000 cars in the US that year, NHTSA records show.
The fine is $5.50 for each 0.1 mpg below the car standard of 27.5 mpg, multiplied by sales.