The Strategist

Daimler to spend over $2B to settle diesel scandal

08/14/2020 - 10:16

The German auto concern Daimler will spend about $ 1.5 billion to settle the "diesel scandal" with the US authorities, and another $ 700 million - to settle a class action lawsuit on this matter, the company said in a release.

Andy C
Andy C
In June 2019, the Bild tabloid reported that the German Federal Automobile Authority (BKA) ordered Daimler to recall 60,000 Mercedes-Benz GLK 220 CDI vehicles "due to unacceptable shutdown equipment" that manipulates the emission system. The concern denied the charges, but in September the Stuttgart prosecutor's office fined the concern €870 million for violations related to the "diesel scandal."

"On the issue of the settlement (of the situation) with the US authorities, Daimler expects costs of $ 1.5 billion (approximately €1.27 billion). The estimated cost of resolving the class action lawsuit is about $ 700 million, which includes compensation for legal costs and remuneration for lawyers," the message says.

The company also clarified that the calculations are subject to further approval by the relevant authorities and that in the coming weeks the authorities will submit the order of reaching an agreement between Daimler and the US authorities to the US District Court for final approval. Daimler also noted that the related costs will impact free cash flow generation over the next three years, but the greatest pressure will come in the coming year.

Volkswagen previously found itself at the center of a "diesel scandal" when the company was accused in the United States of equipping diesel cars with software that underestimated actual emissions of harmful substances. The American government ordered the concern to recall 482,000 Volkswagen and Audi passenger cars sold in the country in 2009-2015. In April 2017, Volkswagen agreed to buy cars from consumers and pay them compensation.