Daimler expects huge losses related to the recent diesel scandal at Mercedes, after the German authorities announce their final decision.
Daimler estimates that the problem of tricking emissions tests for diesel Mercedes engines will cause total losses of over 30 billion euros. Last autumn, the German press spoke of a possible fine of one billion euros for Daimler for tricking diesel emissions. At that time, German motor vehicle authority KBA discovered illegal devices on 280,000 C-Class and E-Class vehicles and ordered the carmaker to recall them. A fine of up to 5,000 euros per vehicle was being considered by the Stuttgart prosecutor.
Daimler now warns that the authorities are likely to rule that other vehicles made by the luxury brand were also “equipped with impermissible defeat devices,” referring to banned software designed to bypass emissions tests.
Daimler also faces regulatory scrutiny by United States authorities. In February 2016 the U.S. Environmental Protection Agency asked Mercedes-Benz to explain emissions levels in some of its diesel cars.
As a result, the Germans increased their provisions from 23 to over 30 billion euros, money they expect to pay as fines, penalties and compensation.
Until the end of the KBA investigation, Daimler is also facing another problem in Germany. Several institutional investors sued the company and demanded damages of 900 million euros because Daimler would have hidden information regarding the manipulation of the emissions, as well as the risks and the costs that derive from using that software, which violates the law capital market.