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September 15, 2020

Daimler settles US regulator and class action diesel emissions cases

Daimler has confirmed costs of $1.5bn (EUR1.27bn) to settle with US authorities over false emissions readings for diesel vehicles.

By Olly Wehring

Daimler has confirmed costs of $1.5bn (EUR1.27bn) to settle with US authorities over false emissions readings for diesel vehicles.

It said on Tuesday the estimated cost of a separate class action settlement was US$700m (EUR591m) and expects more expenses ("of a mid three digit million EUR amount") to fulfill requirements of the settlements.

The regulatory proceedings were started over the emission control systems of about 250,000 diesel vehicles sold in the US and involved US authorities are the Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environment and Natural Resources Division of the US Department of Justice (DOJ), the California Attorney General's Office, and US Customs and Border Protection.

As previously disclosed, the company agreed with plaintiffs lawyers to settle a consumer class action pending in US District Court for the District of New Jersey.

"By concluding the proceedings, Daimler avoids lengthy court actions with respective legal and financial risks," the automaker said in a statement.

"As stated in the consent decrees and the class action settlement, the company denies the authorities' allegations as well as the class action plaintiffs' claims and does not admit any liability to the United States, California, plaintiffs, or otherwise.

"The settlement resolves the company's pending civil proceedings with the US authorities without reaching any determinations as to whether functionalities in Daimler's vehicles are defeat devices."

As part of the settlement and and on top of payment of $875m (EUR738.5m) in civil penalties, the company will further enhance its technical compliance management system and modify some diesel vehicles. It will also conduct mitigation measures nationwide and provide funding for additional NOx emissions mitigation initiatives in California.

Daimler noted: "The vehicles subject to the US settlement were not sold in the same configurations in Europe and the emission control system of the US vehicles is different from the models sold in Europe due to the differing certification and legal frameworks."

"Daimler has agreed to settle this litigation to avoid further costs of litigation, and return focus to its core business. Daimler denies the material factual allegations and legal claims asserted by the plaintiffs and settlement class members."

It expects impact on free cash flow over the next three years with the main impact within the next year.

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