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August 14, 2020

Daimler US diesel settlement to cost $1.5bn

Daimler said it had agreed a settlement with US authorities over diesel emissions that would cost it about US$1.5bn.

By Olly Wehring

Daimler said it had agreed a settlement with US authorities over diesel emissions that would cost it about US$1.5bn.

The deal includes subsidiary Mercedes-Benz USA and will settle civil and environmental claims over the emission control systems of about 250,000 diesel passenger cars and vans sold in the US.

Involved 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 the US Customs and Border Protection.

“The company has cooperated fully with the US authorities and continues to do so,” Daimler said in a statement.

Daimler and MBUSA have also reached an agreement in principle with plaintiffs’ counsel to settle the consumer class action ‘In re Mercedes-Benz Emissions Litigation’ which is pending before the US District Court for the District of New Jersey.

The company said it had made sufficient provisions for the expected total costs of the settlements and has frequently referred to the diesel issue in financial results announcements.

Daimler said it expected costs of about $1.5bn (EUR 1.27b) with the estimated cost of the class action settlement around $700m (EUR592m) including the court’s anticipated award of lawyers’ fees and costs.

Daimler also estimates further expenses of a “mid three digit million euro amount” to fulfill requirements of the settlements.

Impact on the free cash flow of its business is expected over the next three years with the main impact within the next year.

“With the proposed settlements, the company takes an important step towards legal certainty with respect to various diesel proceedings in the United States,” Daimler added.

The settlements are subject to the final approval of the relevant authorities and courts.

Daimler isn’t just facing problems with diesels in the US.

Reports last June said Mercedes could be forced to recall up to 500,000 vehicles in the UK over claims of a new ‘dieselgate’ emissions scandal. Meanwhile, over 10,000 British owners have signed up to join a possible legal case against the automaker amid fears that they were misled into buying polluting cars, media outlets reported.

One of the lawyers involved tells would-be litigants “the German Federal Motor Transport Authority (KBA) found that Mercedes installed a cheating software in their diesel engines that limited emissions readings during vehicle emissions testing and therefore misrepresenting the actual emissions during real-world driving. The nitrogen oxide (NOx) emissions of the engines as a result didn’t comply with EU regulatory requirements”. Daimler had been fined the equivalent of GBP776m by German prosecutors and the KBA had ordered Mercedes to recall around 90,000 vehicles in England and Wales.

It had been estimated 160,000 vehicles had been affected by recall notices in the UK so far and there were predictions the number could reach half a million based on historic sales figures of cars with the affected engine types. In all, around 1m British Mercedes drivers, including previous owners, could be eligible for compensation payouts worth up to GBP20,000 each, the reports claimed.

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