Daimler ordered to recall over 200,000 diesel cars

Mercedes diesel car

The Stuttgart-based carmaker has said the US Department of Justice has inquired about the company's emission certification processes, and that German prosecutors in Stuttgart are investigating Daimler employees on suspicion of fraud and criminal advertising.

According to the authorities, the cars use an illegal shut-off device that reduces exhaust gas cleaning when the vehicles are being driven normally on the road.

Daimler is being rapped by German authorities after a series of meetings between the two parties failed to properly explain away the discovery of five purported "illegal switch-off devices" found in the Benz's diesel engines.

The main offenders in this case are diesel-powered versions of the Mercedes-Benz C-Class sedan, GLC SUV as well as Vito commercial vehicle.

The Mercedes-Benz star is displayed on the front of a Mercedes-Benz vehicle at the annual news conference of German auto giant Daimler AG in Stuttgart, southwestern Germany, on February 1, 2018.

Daimler declined to comment on the 1 million vehicles figure, but said it is cooperating fully and transparently with the KBA and Germany's Transport Ministry. Daimler hasn't contested the existence of the devices, but has argued that the devices may not be illegal.

Mercedes GLC
MERCEDESMercedes GLC C Class and Vito cars found to be with emissions defeat devices

Daimler has already announced a voluntary recall of three million diesels to install a software fix meant to reduce emissions.

In January 2017, US regulators ordered a stop-sale of several Fiat Chrysler Automobiles' diesel-powered models, including its Jeep Grand Cherokee, after regulators said it emitted more nitrogen oxide than allowed by law.

The auto maker said in a statement: 'The functions are part of a complex emission control system created to ensure robust emission control in different driving conditions and over the life of a vehicle.

Evercore ISI analyst Arndt Ellinghorst predicted the costs for the required software update for Daimler would be less than 100 million euros ($118 million).

Thus far, Daimler continues to deny any legal wrongdoing when it comes to diesels and the automaker will avoid any fines stemming from this issue as long as it carries out the recall. "Overall, this outcome should de-risk the stock".


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