Daimler fined over diesel emissions manipulation

Daimler fined over diesel emissions manipulation

25 September 2019

German prosecutors have fined Daimler a total of €870 million following a probe into selling rigged diesel cars.

The carmaker was guilty of ′negligent 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.

The fine is the latest fallout from the Dieselgate scandal that broke four years ago and has brought an abrupt end to the popularity of the technology in Europe.

Recall disagreement

′The public prosecutor essentially refers to the known recall orders by the German Federal Motor Transport Authority (KBA),' Daimler says in a statement.

′To 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.'

Daimler was also at pains to point out that the sanctioning portion of the fine, in the region of €4 million, was below the statutory maximum amount, with the further €866 million determined by the profitability of the business.

Earnings concern

In its statement, the carmaker also highlighted that the fine would not affect its Q3 earnings, maintaining its forecast as published. However, Daimler already cut the company's 2019 earnings outlook in June, when it lifted provisions for issues related to its diesel vehicles by a ′high three-digit million euro amount'.

′Relevant for the reassessment is an increase in expected expenses in connection with various ongoing governmental proceedings and measures with regard to Mercedes-Benz diesel vehicles,' the company said in a brief statement at the time.

The company is suffering financially and posted a further Q2 warning in July, suggesting a loss of up to €1.6 billion, blaming the need to provide an extended recall in connection with issues surrounding Takata airbags, which itself will cost €1 billion. In the same period last year, the carmaker made a €2.6 billion profit.

New CEO Ola Källenius is seeking to shore up the business with €6 billion of savings following a drop of 22% in the German carmaker's operating profit during Q4 2018. This was blamed on trade wars, industry downturn, and the rising cost of electric vehicle development, according to reports.