Published: Tue, June 12, 2018
Markets | By Otis Pena

Germany hits Mercedes with mass diesel recall

Germany hits Mercedes with mass diesel recall

Germany's Transport Ministry said on Monday that 774,000 Mercedes-Benz vehicles in Europe had been found to contain unauthorized software defeat devices and ordered Daimler to recall more than 200,000 cars in Germany.

A Daimler spokesman confirmed the recall to AFP, adding "legal questions will be cleared up in the appeal procedure" against the transport ministry decision. The firm's compression ignition engines use urea nitrate liquids to naturalize nitrogen oxide emissions in exhaust fumes.

The report of the devices - which modify an engine's exhaust management software to behave differently during emissions testing - closely mirrors the Dieselgate scandal that struck German carmaker Volkswagen in September 2015.

This morning, Daimler shares were trading 1.76 percent lower, at 61.19 euros, underperforming the Stoxx 600 Automobile index which was 0.48 percent lower.

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"The federal government will order an immediate official recall because of illegal defeat devices", Transport Minister Andreas Scheuer said in a statement.

Since rival Volkswagen admitted in 2015 to cheating US emissions tests, German carmakers including VW, Daimler and BMW have faced a backlash against diesel technology in which they have invested billions of euros.

Daimler's diesel nightmare continues. However, Germany's road vehicle authority, the KBA, has taken issue with the emission control features amid suspicion they allow vehicles to emit excess pollution without detection.

The scandal has so far cost the world's largest auto manufacturer over €25 billion (US$29.5 billion) in fines, buybacks and compensation, and senior executives are under investigation over their roles in the cheating.

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