German car shares slump amid fears of lawsuits over cartel claims

Shares in Germany's leading carmakers fell sharply on Monday as the auto manufacturers skidded into a fresh crisis triggered by allegations that they operated a secret cartel to discuss prices and technology.

Daimler shares tumbled 3.7 per cent in morning trading on the Frankfurt Stock Market, while Volkswagen stock was marked down 2.9 per cent and by 2.5 per cent for BMW shares as the carmakers faced up to the threat of a wave of lawsuits.

The weekly news magazine Spiegel reported last week that the carmakers, which also included VW's luxury offshoots Porsche and Audi, have been consulting with each other since the 1990s over their vehicles, costs, suppliers and the handling of diesel emissions.

The report comes in the wake of the diesel emissions scandal that rocked the German car industry and hit confidence in the nation's auto business. VW admitted in September 2015 to cheating on pollution tests on more than 11 million vehicles around the world.

The car industry is one of the heavyweights of the German manufacturing sector, directly employing more than 800,000 people and last year generating sales totalling 405 billion euros (472 billion dollars).

BMW insisted in a statement that it does not manipulate emissions tests and that it complies with legal requirements, saying it was "a matter of principle" for the premium carmaker.

Both Daimler, the manufacturer of luxury Mercedes-Benz vehicles, and VW have described the cartel reports as speculation.