BMW hit by $10 million fine in South Korea

South Korea’s government is fining BMW $10 million over its handling of a spate of engine fires in the country — and the automaker’s problems don’t end there.

The Ministry of Land, Infrastructure and Transport said Monday that as well as imposing the 11.2 billion won ($9.9 million) fine, it will refer the case to prosecutors to decide whether criminal charges are necessary.

BMW’s (BMWYY) crisis in South Korea erupted over the summer as dozens of reports came in of its vehicles bursting into flames. The German automaker said the fires were the result of a problem with the cars’ exhaust systems and began checking vehicles that could be at risk.

But a panel set up by the government to investigate the matter found that BMW tried to hide the issue and then took too long to recall the 172,000 affected vehicles, according to the transport ministry.

In a statement Monday, BMW said it launched the recall “as soon as the root cause of the fire was confirmed.” The statement didn’t address the allegation that the automaker initially tried to cover up the problem.

BMW said the government investigation reached a similar conclusion to the company on the cause of the fires: a defect in the vehicles’ exhaust gas recirculation unit, a system that channels some fumes back into the engine to reduce pollution. But the transport ministry said the problem was the result of a design deficiency, which BMW denies.

More than 50 BMWs have caught fire in South Korea this year, but no deaths or injuries have been reported as a result. At one point, the government ordered local authorities to ban people from driving any of the potentially fire-prone cars that hadn’t been brought in for checks.

The company said Monday that it’s trying to complete the recall in South Korea “as quickly as possible” and apologized “for the concern and inconvenience” its customers have suffered.

“The BMW Group is cooperating with the ongoing investigation and is committed to resolving the issue,” it said.

BMW was the second most popular brand of imported cars in South Korea last year, selling nearly 60,000 vehicles, according to the Korea Automobile Importers <>& Distributors Association. The German company sold more than 2 million vehicles worldwide last year.
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