By David Shepardson

TRAVERSE CITY, Mich. (Reuters) - The U.S. Environmental Protection Agency said on Tuesday it has approved the sale of new 2017 model year BMW AG <BMWG.DE> diesel vehicles in the United States after a thorough review.

Chris Grundler, head of the EPA's Office of Transportation and Air Quality, told reporters on the sidelines of an automotive conference the agency granted certification to BMW on Friday. BMW had said last month that U.S. product certification of all 2017 BMW diesel models has been delayed due to testing logistics.

"We tested the vehicles every which way from Sunday," Grundler said. "We asked for more data from the company."

In September, EPA said it would review all U.S. diesel vehicles following an admission from Volkswagen AG <VOWG_p.DE> that it installed software in cars allowing them to emit up to 40 times legally permissible level of pollution.

Grundler said EPA has not yet approved sale of Daimler AG's <DAIGn.DE> 2017 diesel Mercedes-Benz vehicles. "Discussions continue," Grundler said, declining to elaborate on why EPA has not approved certifications for the Mercedes vehicles.

In April, Daimer disclosed the U.S. Justice Department had asked the carmaker to investigate its emissions certification process for vehicles including its Mercedes brand.

Last month, Daimler said EPA and the California Air Resources Board were also conducting inquiries. Daimler said in its earnings release that it could face "delays in obtaining regulatory approvals necessary to introduce new diesel models, which could cause significant collateral damage including reputational harm."

BMW said about 4 percent of U.S. sales last year were diesel models.

VW still hasn't received approval to sell 2016 diesel vehicles in the United States and hasn't asked the EPA for permission to sell 2017 diesel models, Grundler said.

(Reporting by David Shepardson; Editing by Chris Reese and David Gregorio)