Daimler To Pay $1.5 Bln Towards Emissions Settlement

German automaker Daimler AG, along with its unit Mercedes-Benz USA LLC, have agreed to pay $1.5 billion after U.S. regulatory authorities approved a settlement in civil proceedings regarding diesel emissions in the country.

As part of the settlement, Daimler will recall and repair the emissions systems in Mercedes-Benz diesel vehicles sold in the United States between 2009 and 2016.

With the settlement, proceedings regarding emission control systems of around 250,000 diesel vehicles in the United States will be resolved.

The settlement addresses allegations that, from 2009 to 2016, Daimler manufactured, imported, and sold more than 250,000 diesel Sprinter vans and passenger cars with undisclosed AECDs and defeat devices programmed into the vehicles’ complex emissions control software. These devices cause the vehicles to produce compliant results during emissions testing.

However, when not running a test, these emissions controls were said to perform differently and less effectively, resulting in an increase in NOx emissions above compliant levels.

Daimler now said the settlement resolves its pending civil proceedings with the U.S. authorities without reaching any determinations as to whether functionalities in its vehicles are defeat devices.

Daimler denied allegations and legal claims asserted by the plaintiffs and settlement class members.

The settlement is subject to ultimate court approval, for which the U.S. authorities have lodged the Consent Decrees with the U.S. District Court for the District of Columbia.

Daimler expects costs of around $1.5 billion or around 1.27 billion euros for the settlement with the U.S. authorities. The estimated cost of the class action settlement is approximately $700 million or around 591 million euros. Further, expenses of a mid-three-digit-million euro amount is also expected to fulfill requirements of the settlements.

As part of the settlement and in addition to the payment of civil penalties of $875 million or around 738.5 million euros, Daimler will also enhance its technical Compliance Management System and conduct an Emission Modification Program for certain diesel vehicles.

The company intends to conduct mitigation measures across the country, and provide funding for additional NOx emissions mitigation initiatives in the State of California.

Daimler will also pay class counsel’s attorneys’ fees and costs in an amount to be determined by the court. Daimler has agreed not to oppose class counsel’s request for attorneys’ fees and costs up to $83.4 million.

The company has also reached a settlement in the consumer class action “In re Mercedes-Benz Emissions Litigation”, which is pending before the U.S. District Court for the District of New Jersey, in order to fully resolve the proceeding by mutual agreement.

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