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BMW faces criminal probe in South Korea; Japan court extends Ghosn's detention

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BMW faces criminal probe in South Korea; Japan court extends Ghosn's detention

TOP NEWS

* Bayerische Motoren Werke AG faces a criminal probe in South Korea after the country's transport ministry fined the carmaker 11.2 billion Korean won and said it would file a complaint with prosecutors over allegedly concealing defects and delaying recalls of BMW cars involved in a series of fires, Reuters reported. The South Korean Ministry of Land, Infrastructure and Transport, which found a design flaw in BMW cars' exhaust gas recirculation valves as the primary cause for the fires, ordered the carmaker to replace all such systems and conduct more checks on their durability. BMW reportedly denied design defects and said it recalled models in a timely manner.

* A Japanese court extended the detention of former Nissan Motor Co. Ltd. chairman Carlos Ghosn for 10 days after prosecutors brought fresh charges of financial misconduct against him, Reuters reported. Separately, Ghosn's lawyer told the court that Ghosn's $14.7 million transfers from 2009 to 2012 did not constitute a breach of trust as they were made for work a person did for Nissan, Bloomberg News reported. The payment was made from Nissan's Middle Eastern unit, Nissan Middle East FZE, to Ghosn's acquaintance in Saudi Arabia, The Japan News reported, citing sources close to the case.

CARMAKERS

* Ford Motor Co. issued a recall of about 874,000 F-150 and Super Duty trucks in North America due to fire risks in the vehicles' engine block heaters. Of the affected vehicles, 410,289 are present in the U.S. and federal territories and 463,793 in Canada.

* The cost borne by Volkswagen AG toward its diesel emissions scandal is expected to be €5.5 billion in 2018, about €2 billion in 2019, and about €1 billion in 2020, Reuters reported, citing VW CFO Frank Witter's comments to the German weekly Boersen-Zeitung. Further, the automaker, which has paid over €27 billion since 2015 in litigation, regulatory fines and fixes for its diesel cars, alerted the country's transport watchdog, KBA, that about 500,000 VW cars globally could still be fitted with emissions-masking software despite their previous recall, the Financial Times reported. VW reportedly said the issue, related to its 1.2 liter, EA-189 engines, was discovered the week of Dec. 17, but the carmaker may take at least three weeks to address it because of the intervening holidays.

* Volkswagen could cut up to 7,000 positions at its Emden and Hannover facilities in Germany as part of the automaker's electric vehicle makeover, German weekly magazine Der Spiegel reported, citing news agency DPA. The redundancies reportedly could be made through partial retirement and voluntary basis.

* Tata Motors Ltd.'s parent company assured British Prime Minister Theresa May that the Indian company has no intention of selling Jaguar Land Rover Ltd. and reiterated its investment plans in the British luxury-car maker, The Sunday Times reported, citing a letter from Natarajan Chandrasekaran, the chairman of Indian conglomerate Tata Sons. The letter comes amid rumors about China's Geely Automobile Holdings Ltd., which owns Volvo Cars and Lotus brands, eyeing JLR, which is seeing sales decline amid regulatory and geopolitical uncertainty in the region. Geely, however, told the newspaper that it has no intention to buy JLR and has not held talks with Tata.

ELECTRIC AND AUTONOMOUS VEHICLES

* Tesla Inc. CEO Elon Musk tweeted that the electric-car maker has released all cars for sale in cases where they were booked by customers, but unable to take deliveries before 2018-end, to make them eligible for a $7,500 U.S. electric vehicle tax break before that reduces to $3,750 from Jan. 1, 2019, onward. The company also will "cover the tax credit difference" in case a customer is unable to take delivery before the deadline, Reuters reported.

* Tesla reduced the price of its flagship Model 3 sedan in China by up to 7.6% after China dropped import tariffs on U.S.-built cars, Reuters reported. The starting price for a Model 3 in China now is 499,000 Chinese yuan, or $72,000.

* The California Public Utilities Commission, or CPUC, gave the go-ahead to driverless startup Zoox to pilot an autonomous vehicle passenger service in the state. All Zoox cars must have a trained test driver at the wheel at all times, and it may not charge people for the rides, the CPUC said. Meantime, Zoox said it submitted its first safety assessment report on autonomous vehicles to the federal government.

* China's BYD Co. Ltd. will launch a new sales network, called e network, for marketing its new energy vehicle models, Gasgoo reported, citing local media reports. BYD's Dynasty sales network for its flagship cars reportedly will continue operating.

POLICY, REGULATIONS AND SAFETY

* The German transport ministry released €333 million for hardware refits of diesel-powered delivery and trade vehicles in a bit avoid their bans in some German cities, German business newspaper Handelsblatt tweeted.

* Italy's upper house of Parliament passed measures to subsidize certain electric and hybrid vehicles by up to €6,000 while levying a tax of €1,100 on new petrol and diesel cars that emit 161-175 grams of CO2 per kilometer, Reuters reported. The proposed tax on conventional vehicles, which rises to €1,600 for vehicles emitting 176-200 gram of CO2 and €2,000 for 201-250 grams, could prompt Fiat Chrysler Automobiles NV to review its €5 billion investment plan for the country. Italy's lower house still needs to approve the new regulations, which would reportedly be enforced March 1, 2019, and continue until 2021-end.

* U.S. Commerce Secretary Wilbur Ross said the commerce ministry's report on whether auto imports pose a national security risk, due Feb. 17, 2019, is still a "work in progress," but added that the administration was keen to correct "concessions that were totally appropriate in 1950" though not anymore, the Financial Times reported, citing a telephone interview with the official. Ross reportedly said President Donald Trump has a "lot of flexibility" in deciding to implement auto import tariffs.

* Automakers in the U.S. replaced over 7.2 million defective Takata airbags, up 30% year over year, but 16.7 million air-bag inflators still need to be replaced, Reuters reported, citing a report from an independent monitor, John Buretta, and the deputy National Highway Traffic Safety Administration chief, Heidi King. The issue is expected to continue as automakers will add nearly 10 million additional inflators to the recall program in January 2019, Buretta reportedly said.

AUTOMOTIVE RETAIL

* Volkswagen Group will write-off its $300 million investment in the corporate ride-hailing app Gett Inc. as the service failed to gain market share against bigger rivals Didi Chuxing Technology Co. Ltd. and Uber Technologies Inc., Reuters reported, citing Der Spiegel. The automaker reportedly declined to comment.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, Hang Seng decreased 0.40% to 25,651.38, while the Nikkei 225 decreased 1.11% to 20,166.19.

In Europe, around midday, the FTSE 100 decreased 0.60% to 6,680.60, and the Euronext 100 decreased 1.08% to 899.85.

On the macro front

The Chicago Fed national activity index is due out today.

The Daily Dose is updated as of 8 a.m. ET. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.

Editor's note: The Daily Dose will not be published Dec. 25 and will return Dec. 26.