Mercedes-maker Daimler paying over $2 billion to settle US diesel issues

While it adds to Daimler's financial headwinds triggered by the Covid-19 pandemic, it still pales in comparison to the over $30 billion that larger-sc
...
File photo used for representational purpose. (Bloomberg)
File photo used for representational purpose.

Daimler AG will pay more than $2 billion to settle US diesel-emissions issues in the latest fallout from years of closer regulatory scrutiny on vehicle pollution.

An agreement in principle with authorities including the US Justice Department and Environmental Protection Agency will cost the German automaker roughly 1.27 billion euros ($1.5 billion), according to a statement. The Stuttgart-based company will pay another 592 million euros to settle class-action litigation brought by consumers.

Also check these Cars

Find more Cars
Mercedes-benz Eqe (HT Auto photo)
BatteryCapacity Icon90.56 kWh Range Icon550 Km
₹ 1.39 Cr
Compare
Mercedes-benz Gls (HT Auto photo)
Engine Icon2999 cc FuelType IconMultiple
₹ 1.32 - 1.37 Cr
Compare
View Offers
Mercedes-benz Eqa (HT Auto photo)
UPCOMING
BatteryCapacity Icon66.5 kWh Range Icon426 Km
₹ 60 Lakhs
View Details
Mercedes-benz Eqs (HT Auto photo)
BatteryCapacity Icon107.8 kwh Range Icon580 km
₹ 1.55 Cr
Compare
Mercedes-benz Gla (HT Auto photo)
Engine Icon1950 cc FuelType IconMultiple
₹ 50.50 - 56.90 Lakhs
Compare
View Offers
Mercedes-benz Glb 2024 (HT Auto photo)
UPCOMING
Engine Icon1332 cc FuelType IconPetrol
₹ 65 Lakhs
View Details

The pacts resolve issues that arose when US regulators stepped up their examination of diesel emissions after Volkswagen AG’s cheating scandal emerged in 2015. The Justice Department asked Daimler to investigate its vehicle-certification process the following year.

Although the expenses add to Daimler’s financial headwinds triggered by the Covid-19 pandemic, the amounts are minor compared with the larger-scale emissions violations that have cost VW more than 30 billion euros. Daimler says it fully cooperated with US authorities, whereas VW officials lied to EPA and California regulators before admitting the company created devices to defeat emissions tests.

Daimler’s issues also involve fewer vehicles. Its agreement with US authorities covers civil and environmental claims related to the emission-control systems of about 250,000 cars and vans. VW admitted in 2015 to rigging as many as 11 million diesel engines worldwide, including roughly 600,000 in the US.

Emissions Issues

The auto industry is still far from out of the woods with US regulators.

Fiat Chrysler Automobiles NV recently disclosed that it had started discussions with the Justice Department’s criminal division to resolve an investigation of diesel-emissions issues. Ford Motor Co. also revealed last year that its emissions-certification process may have been flawed and that the Justice Department had opened a criminal investigation.

Electric-car maker Tesla Inc. has meanwhile posted a string of consecutive quarterly profits thanks in part to selling regulatory credits to carmakers that could not otherwise meet tougher pollution standards. The Model 3 maker’s market capitalization has soared past $300 billion, almost double VW, Daimler and Ford’s combined value.

Years of Impact

Daimler expects to incur hundreds of millions of euros in additional expenses related to fulfilling the requirements of its settlements and said the costs will impact its business for the next three years.

The company warned in its annual report published in February that German motor-industry watchdog KBA is likely to rule that additional vehicles are equipped with defeat devices. Daimler boosted provisions for legal and regulatory costs as a result.

In its statement, Daimler said it has made sufficient provisions for the cost of the US settlements. In the coming weeks, authorities will file consent decrees with a US district court for final approval.

A spokesperson for the California Air Resources Board, one of the authorities involved in the settlements, said the consent decree is expected to be filed in mid-September. Representatives for the Justice Department and EPA declined to comment.

First Published Date: 14 Aug 2020, 08:03 AM IST
NEXT ARTICLE BEGINS

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy
Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.