Wed, Jun 13, 2018 - Page 10 News List

Daimler slapped with mass recall for using defeat devices, but avoids fine

Bloomberg

With a German government order to recall 774,000 vehicles in Europe, Daimler AG stands accused of having used illegal defeat devices in its engines, while escaping the crushing cost of fines.

The move follows consultations with the German government in Berlin on Monday, which Daimler chief executive officer Dieter Zetsche called “constructive.”

German Minister of Transport and Digital Infrastructure Andreas Scheuer for his part did not mince his words by ordering “an immediate formal recall because of prohibited shutoff devices.”

The automaker is to upgrade engine software in Vito vans as well as the GLC sport utility vehicle and C-Class sedan.

The models are not available in the US, according to the brand’s US Web site, and the company has repeatedly denied being complicit in the kind of cheating conducted by Volkswagen AG (VW) that led to the diesel-engine crisis three years ago.

“We don’t see any evidence that Daimler was designing software to deliberately cheat on emission testing,” said Arndt Ellinghorst, an analyst with Evercore ISI in London, who estimated the cost to be less than 100 million euros (US$117.92 million). “With this recall, fines are off the table.”

While a setback for a company that has steadfastly claimed a clean-engine record, the software-focused recall means Daimler escaped more costly measures, such as fines or a hardware fix.

Germany has ratcheted up pressure on Daimler, criticizing the company’s piecemeal response to concerns about excessive pollution from its diesel vehicles.

Unlike VW, which admitted duping official emissions tests and faces costs of about 26 billion euros in fines, buybacks and recalls globally, Daimler has rejected wrongdoing.

As the diesel fallout rumbles on, German prosecutors also on Monday named Rupert Stadler, head of VW’s Audi unit, a suspect in the cheating scandal.

Germany’s automotive regulator KBA found five unapproved software functions in Daimler’s Euro 6 diesel engines, affecting as many as 1 million vehicles in Germany, Bild am Sonntag reported on Sunday.

This follows the KBA last month instructing the automaker to recall 4,923 Vito vans worldwide that do not comply with regulations.

Daimler at the time said it would go to court if necessary to overturn the order.

The company on Monday said it is considering an appeal.

Daimler already voluntarily recalled about 3 million vehicles in the EU last year, alongside similar moves by VW and BMW AG, for software updates to improve emissions performance.

Liberal interpretations of loose EU rules on car emissions, ultimately resulting in many cities failing EU pollution limits, have led to a number of spats between authorities and automakers.

Daimler relies on diesel vehicles for profit and to lower the carbon dioxide output of its vehicles to meet environmental regulations.

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