Mercedes to be hit with ‘dirty’ diesel penalty

Daimler reiterated that recent steps by U.S. authorities to investigate diesel-emissions pollution and so-called auxiliary emission control devices could lead to significant penalties and vehicle recalls.

Several federal and state authorities, including the U.S. Department of Justice and Environmental Protection Agency (EPA) as well as the Stuttgart prosecutor in Germany are investigating the emissions of Mercedes-Benz diesel vehicles.

Last month, the Stuttgart prosecutor launched an investigation against Daimler employees on suspicion of fraud and misleading advertising tied to vehicle emissions.

"In light of the ongoing governmental information requests, inquiries and investigations, and our own internal investigation, it cannot be ruled out that the authorities might reach the conclusion that Mercedes-Benz diesel vehicles have similar functionalities," Daimler said in its quarterly report on Wednesday, reiterating a statement from its annual report.

The inquiries and investigations are still ongoing, Daimler said, adding that the outcome of these probes could not be predicted.

Daimler said in January 2017 that U.S. authorities appeared to have taken a tough stance on what constitutes an illegal defeat device, a step that could have implications for Mercedes in particular.

Daimler said that in a notice of violation issued against another manufacturer in January that regulators identified functionalities "apparently including functionalities that are common in diesel vehicles, as undisclosed Auxiliary Emission Control Devices (AECD)."

"If these or other inquiries, investigations, legal actions and/or proceedings result in unfavorable findings, an unfavorable outcome or otherwise develop unfavorably, Daimler could be subject to significant monetary penalties, remediation requirements, vehicle recalls, process improvements and mitigation measures," the automaker said.

In January, the U.S. EPA accused Fiat Chrysler Automobiles of illegally using hidden software to allow excess diesel emissions to go undetected. Autonews

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