Court documents reveal that Germany’s Daimler AG, the parent company of Mercedes-Benz, will pay $2.2 billion to settle the US chapter of its diesel emissions-cheating “defeat device” scandal.
The second major German automaker caught cheating on the claimed NOx emissions levels from its diesel engines after Volkswagen, Daimler has been the subject of a five-year cheating investigation by the US Government.
The cheat, for which Daimler denies any liability, covers claims from a quarter of a million American Mercedes-Benz diesel owners, according to court documents, and is dated August 13.
The settlement from Daimler AG and the Mercedes-Benz USA LLC offshoot covers civil and environmental from the diesel car, SUV and van owners in the US.
The Justice Department confirmed the Mercedes-Benz-branded vehicles involved carried at least 16 auxiliary emissions control devices, or “defeat” devices, designed to lower emissions during laboratory testing.
Just like Volkswagen’s Dieselgate crisis, Daimler tried to use software fiddles to avoid the testing procedures in the US, and it is also under severe examination for the same thing in Europe.
The crisis is not one made by current CEO Ola Kallaenius, who inherited all manner of hidden hurdles when he took over from Dr Dieter Zetsche in May last year.
His career path includes a three-year stint at the helm of AMG until 2013, before taking over the executive board position for sales, joining the board of management in 2015 and serving a short stint as the head of R&D before taking over the CEO role.
Daimler aside $1.5 billion in August to settle the cheating scandal with US authorities, with the remaining $700 million set aside to settle things with owners.
The settlements will “Serve to deter any others who may be tempted to violate our nation’s pollution laws in the future,” US Deputy Attorney General Jeff Rosen said.
The 16 auxiliary emissions control devices allowed the “vehicles to perform in a variety of consumer-desirable ways, including allowing for fewer (diesel exhaust fluid) tank refills (and) better fuel mileage,” the Justice Department stated.
The amount covers the Clean Air Act penalty of $875 million, $285.6 milion in Californian fines and $546 million to fix the pollution systems and remove the auxiliary emissions control devices.
Yet, even the $30 billion paid out so far by the Volkswagen Group failed to deter Daimler to follow its compatriot, though much of the engineering would have been done concurrently.
Each affected owner will receive up to $3,290 each to have their emissions cleaned up and pulled back into legal territory, and expenses for attorneys have also been set aside.
Unlike the Volkswagen Dieselgate case, Daimler will not need a compliance babysitter. Volkswagen had a compliance monitor for three years, and the oversight ended last week.
While then CEO Martin Winterkorn and four other former board members are facing criminal charges in both Germany and the USA, no single manager has been singled out from Daimler.
Daimler is also not required to buy back vehicles, like Volkswagen did, unless it can’t repair the vehicles in a reasonable time, while binding consent decrees will force it to repair all of the cheater cars.
Daimler, the parent company of the world’s oldest automaker, Mercedes-Benz, is not out of hot water, though. It remains the subject of a criminal investigation in its native Germany, which could raise its liability costs even higher.