Mercedes parent Daimler fears its own diesel crisis in U.S.
Mercedes-Benz parent company Daimler AG warned this week the automaker could face significant fines and recalls as a result of U.S. authorities’ investigation into its own diesels. The automaker launched an internal investigation at the request of the EPA a year ago after reports of possible discrepancies in the emissions levels of its U.S. market vehicles following the fallout of the Volkswagen diesel crisis.
In its quarterly report, Daimler indicates regulators have broadened the definition of what can be termed “an undisclosed auxiliary emissions-control device” to encompass some systems common in diesel vehicles.
“In light of the recent notices of violation that were issued by U.S. environmental authorities to another vehicle manufacturer in January 2017, identifying functionalities, apparently including functionalities that are common in diesel vehicles, as undisclosed Auxiliary Emission Control Devices and potentially impermissible, and in light of the ongoing governmental information requests, inquiries and investigations, and our own internal investigation, it cannot be ruled out that the authorities might reach the conclusion that Mercedes-Benz diesel vehicles have similar functionalities,” the automaker said, referencing the notice of violation received by FCA for some of its diesel Jeep and Ram models.
“If these or other inquiries, investigations, legal actions and/or proceedings result in unfavorable findings, an unfavorable outcome or otherwise develop unfavorably, Daimler could be subject to significant monetary penalties,” Daimler notes.
The Volkswagen diesel crisis, which was initially estimated to cost the company a maximum of $100 million two years ago by VW’s own estimates, has reset the bar on auto manufacturer penalties and recalls many times over. $25 billion has been devoted to the recall and compensation program in the U.S. alone, and Daimler’s reading of the changing regulatory environment appears to reflect this new reality.
Daimler says that while the probes and inquiries are still ongoing, it has no indication of the outcome.
“If the outcome of such legal proceedings is detrimental to Daimler, the group may be required to pay substantial compensatory and punitive damages or to undertake service actions, recall campaigns, monetary penalties or other costly actions,” Daimler says, adding that it could also hurt the company’s reputation in the same way the diesel crisis has hurt VW.
Daimler’s report comes weeks after prosecutors in Germany opened their own probe against Daimler employees on suspicion of manipulating emissions data and false advertising. The somber assessment also follows delays at obtaining EPA certification for U.S.-bound diesel models, including the diesel C-Class badged C300d.