Daimler recalls 3m cars in latest diesel blow

MUNICH • Daimler AG moved to head off a growing crisis over emissions concerns by voluntarily recalling more than three million MercedesBenz diesel vehicles in Europe, marking the latest blow to the technology since Volkswagen AG’s (VW) cheating scandal erupted nearly two years ago.

The carmaker will extend an ongoing upgrade of 250,000 compacts and vans to nearly every modern Mercedes diesel on the road. The plan, which involves a software patch and avoids complex component fixes, will cost about €220 million (RM1.09 billion), the Stuttgart, Germany-based company said on Tuesday.

The move comes against a backdrop of the massive fines that beset VW, and as Mercedes continues to face investigations in Germany and the US.

“This is about managing diesel’s decline as gently as possible and to get a little bit of reprieve,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “That’s not going to change the fundamental direction of the shift in technology.”

Diesel, which powers about half of the cars sold in Europe every year thanks to taxes that make the fuel cheaper at the pump, has been increasingly under attack since VW admitted to duping regulators in September 2015. With the technology crucial to Daimler’s strategy to meet targets for lower CO2 emissions, the automaker can ill afford to have diesel further sullied by doubts and allegations.

Germany’s Transport Ministry, which last week said it’ll check additional Mercedes models for possible emissions violations, said the decision sent a good signal ahead of an Aug 2 national task force meeting on diesel in Berlin. The ministry will push forward with a review of Mercedes cars announced last week with the KBA motor transport authority, ministry spokesman Sebastian Hille told reporters yesterday.

As well as recalling diesels with Euro-5 and -6 emissions standards, the manufacturer also plans a “rapid” rollout of a completely new diesel engine family, the carmaker said.

The plan marks a conciliatory step after Daimler vowed to fight accusations of cheating by “ all legal means” following a meeting with officials in

Berlin last week. The crisis has clouded Daimler for months, with hundreds of police officers and prosecutors searching company sites in May.

“This is finally a proactive move to put something on the table and a solid attempt at getting out in front of the debate,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. Daimler’s estimation for the cost of the recall, at about €70 per car, is “extraordinarily low” and could rise, he said. — Bloomberg