BMW Korea faces lawsuit by customers over faulty engines


A group of customers has filed a lawsuit against BMW Korea and its dealer Deutsche Motors over faulty engine parts allegedly susceptible to fire, demanding compensation. 

Ha Jong-sun, a lawyer at the Seoul-based Barun Law, said Monday that four owners of the BMW 520d sedan lodged the suit with the Seoul Central District Court, seeking 5 million won (S$6,091) in damages for safety concerns and a drop in car value. The amount of compensation could go up, depending on the result of the vehicle evaluation, he said. 

The plaintiffs all own the BMW 520d manufactured between 2011 and 2016, which is subject to a massive voluntary recall that the company announced last week after a series of incidents of the engine catching fire while being driven. 

Deciding to recall a total of 106,317 units of the 520d sedans and 41 other models, BMW Korea admitted that the cause of fire was a faulty exhaust gas recirculation module, used for lowering emissions. The part was manufactured by a Korean parts maker. 

Since December 2017, a total of 28 BMW vehicles have caught fire on motorways here. Of the total, 19 were the diesel version of the BMW 520, all manufactured before 2017.

"BMW Korea could have pointed out the EGR as the cause of the fire early, considering that it installed the faulty parts that were manufactured by a Korean parts maker, unlike vehicles sold in Europe," Ha said. 

BMW Korea has been using different exhaust gas recirculation modules since 2017, he said, stressing that it could imply that the company might have known about the problems with the part back then, but concealed the defects. 

BMW Korea flatly denied the speculation, saying that it changed the part in 2017 as part of a regular procedure of a vehicle upgrade, and discovered the problem with the module only in July. 

"As soon as the incident of the engine catching fire happened in July, we underwent an intensive investigation with technicians dispatched from the head office and found out that the cause of fire was the EGR cooler," said a BMW Korea official.

"We will thoroughly review the complaints and will respond to claims within the boundaries of the law. What is the most urgent thing for now is to dispel customers' concern by conducting the nationwide recall. We will fully mobilize our resources at the full capacity," he said.

Practically seen as a class-action case here, some market watchers viewed the case as the biggest crisis for the local branch of the German luxury carmaker, which has been on the fast track for years.

Launched in 1995, BMW Korea was the top importer between 2009 and 2015, selling more than 400,000 units for the past 22 years. As the second-largest auto importer, it saw 3.64 trillion won in sales as of 2017. It is wholly owned by BMW Group.

The case is likely deal a blow to the German carmaker, which has been making intensive marketing efforts to regain its top position overtaken by its German rival Mercedes-Benz last year. The imported car market has been growing rapidly, despite a series of document forging scandals regarding diesel emissions. Competition among importers in South Korea -- long dominated by local brands Hyundai and Kia -- has been intense, with Audi and Volkswagen resuming sales by offering huge markdowns. 

Separately, another BMW 520d sedan owner whose car caught fire has taken legal action against BMW Korea and is seeking 10 million won in damages. 

Market experts also blamed the Korean government for allegedly overlooking the problem with the 520d.

In December, the BMW 520d was named the safest car in Korea by the Ministry of Land, Transport and Infrastructure.

The ministry has launched a "compulsory" probe into the BMW case, accusing the carmaker of dragging its feet. The government taking such a "forceful" action is rare, according to an industry insider who declined to be named.

The government could order BMW to stop selling vehicles in the worst-case scenario, he said, adding that the faulty EGR could make the company subject to sales suspension.

South Korea is one of the top-selling markets for the BMW 520d, as bigger markets the US, China and Japan prefer gasoline-powered cars.