Mercedes-Benz USA and Daimer AG have agreed to pay $149.6 million to settle allegations that the automaker secretly installed devices in hundreds of thousands of vehicles to pass emissions tests, a coalition of attorneys general announced Monday.
Background of the Allegations
Between 2008 and 2016 the German automaker equipped more than 211,000 diesel passenger cars and vans with software devices that optimized emission controls during tests but reduced the controls during normal operations. The devices enabled vehicles to far exceed legal limits for nitrogen oxides, a pollutant that can cause respiratory illnesses and contributes to smog.
The states alleged that Mercedes installed the devices because it couldn’t reach design and performance goals such as fuel efficiency while complying with emissions standards. The automaker allegedly concealed the devices from state and federal regulators and the public while marketing the vehicles as “environmentally friendly” and compliant with emissions standards.
Settlement Details
The agreement is still subject to court approval. The settlement calls for the automaker to pay the attorneys general $120 million with another $29 million payment suspended and potentially waived pending completion of a consumer relief program.
The consumer relief program will extend to roughly 40,000 vehicles with the devices that hadn’t been repaired or permanently removed from the road by Aug. 1, 2023. Owners of those vehicles would receive $2,000 per vehicle if they install approved emissions modification software and an extended warranty.
Additional Requirements
The settlement also requires Mercedes to comply with reporting requirements and refrain from any further unfair or deceptive marketing or sale of diesel vehicles.
Previous Settlement
Daimler AG and Mercedes-Benz USA already agreed in 2020 to pay $1.5 billion to the U.S. government and California state regulators to resolve the emissions cheating allegations.
Mercedes-Benz Statement
Mercedes-Benz issued a statement saying the deal announced Monday will resolve all remaining legal proceedings tied to diesel emissions in the United States, but the company still considers the accusations unfounded and denies any liability. The automaker has made “sufficient provisions” for the cost of the settlement, the statement said.
Coalition Composition
Fifty attorneys general, including the attorneys general of the District of Columbia and Puerto Rico, made up the coalition announced Monday. California was not part of the group.
Industry Context
Volkswagen also ended up paying $2.8 billion to settle a criminal case due to emissions cheating.
Key Takeaways
- Mercedes-Benz USA and Daimer AG will pay $149.6 million to settle emissions-cheating allegations.
- The settlement includes a consumer relief program covering roughly 40,000 vehicles and $2,000 compensation per vehicle.
- The automaker maintains it denies liability and has made sufficient provisions for the settlement cost.
This agreement marks the latest step in a series of settlements that automotive companies have reached to address allegations of emissions cheating across the industry.
