Daimler facing lawsuit from investors over diesel scandal
08 January 2020
8 January 2020 German carmaker Daimler is facing a lawsuit from more than 200 of its institutional investors over its failure to disclose the use of diesel emissions cheating software. Shareholders bringing the case against the manufacturer, including banks and pension funds, are looking for â‚¬900 million in damages, alleging that stock once worth more than â‚¬90 a share fell to approximately â‚¬60 in 2018 after regulators accused the carmaker of installing illegal software in its vehicles. In a filing with a court in Stuttgart, Germany, Daimler is accused of violating its obligations under capital market law by not mentioning the existence of the devices in its financial reports or ad hoc announcements. Fine penalty Following the emergence of diesel emissions cheating in 2015, Daimler denied it had ever used similar systems to those found in millions of Volkswagen vehicles. Yet investigators in Germany announced during 2018 that they were looking into possible emissions manipulation at the carmaker. In September last year, prosecutors fined Daimler a total of â‚¬870 million following the conclusion of this probe. The carmaker was guilty of â€²negligent violation’ having sold about 684,000 vehicles that did not comply with regulations on emissions of nitrogen oxides (NOx), according to a statement from Stuttgart authorities. â€²The public prosecutor essentially refers to the known recall orders by the German Federal Motor Transport Authority (KBA),’ DaimlerÂ replied in a statement. â€²To get clarity also for the future with respect to the interpretation of relevant legal provisions in a complex technical environment, Daimler AG maintains the objections against the KBA orders. After weighing all aspects, Daimler has refrained from taking a legal remedy in the public prosecutor’s administrative offence proceeding. It is in the company’s best interest to end the proceeding in a timely and comprehensive manner and thereby conclude this matter.’ Difficult times The claim against Daimler mirrors an action taken against Volkswagen by its own investors, who are seeking more than â‚¬9 billion in damages. This lawsuit comes at a tricky time for Daimler, which is undergoing a financial struggle. The carmaker admitted last year that its average CO2 levels across its fleet had increased in 2018, thanks to the introduction of WLTP, and as a result, it was expecting a large fine in 2021 under EU CO2 emission regulations. Daimler also offered a series of profit warnings throughout 2019, with its new CEO, Ola KÃƒÂ¤llenius, seeking â‚¬6 billion in savings at the manufacturer. The company has entered a joint venture with Geely to take over the Smart brand and announced a raft of job cuts to help continue its investment in electric vehicles, a move aimed at reducing its high CO2 emissions. If the company is found guilty in this case and is ordered to pay â‚¬900 million in damages, it could trigger another round of cuts, or reduced investment in various programmes, in order to cope with the financial penalty.