Investigations by Google found that BMW's German website influenced search results to ensure top ranking when users searched for "used car".
Google has now reduced BMW's page rank to zero, ensuring the company no longer appears at the top.
BMW admitted using so-called "doorway pages" to boost search rankings, but denied any attempt to mislead users.
BMW's activities were revealed in a blog by Google software engineer Matt Cutts.
However, once a user clicked on the link displayed in Google's results window, they were redirected to a regular BMW Germany page, which contained far fewer of the key words.
'Do not deceive'
A BMW spokesman admitted the company used the doorway pages, a practice known as search engine optimisation and banned by Google.
But the spokesman insisted the company's intentions were honourable.
"We did not provide different content in the search results to the final website," Markus Sagemann told the BBC News website.
"However, if Google says all doorway pages are illegal we have to take this into consideration."
On Google's own website the company lists a series of quality guidelines.
First among those is a requirement to design websites for users, not for search engines.
"Don't deceive your users or present different content to search engines than you display to users, which is commonly referred to as 'cloaking'," Google says.
Google confirmed that BMW.de had been removed from search results, adding that it would not tolerate any attempts to manipulate searches.
"The quality of our index and search results is of the utmost importance to Google," the company said in a statement.
Google would continue to strive to protect the accuracy and quality of its results, it added.
The action against BMW comes as Google faces criticism over its expanding activities.
Last month Google unveiled a new Chinese site, agreeing to Chinese government restrictions on search results.
The company's shares fell sharply on Wall Street after the California-based firm announced a $9m drop in profits, falling short of expectations for the first time.
It also bought a 5% stake in AOL, worth $1bn, fuelling fears of preferential treatment for AOL within Google searches.
Google has also remained quiet over accusations that business rivals have manipulated its click-based advertising system.
Source BBC News