Mercedes-Benz agrees to pay $149.6 million to resolve US Dieselgate probe

Mercedes-Benz has agreed to a $149.6 million settlement with US states to resolve a long-running investigation into allegations that the German automaker cheated on diesel emissions tests, New York Attorney General Letitia James said on December 22.

The company said the agreement effectively brings to an end its remaining legal exposure in the United States linked to Dieselgate, the emissions scandal that first came to light at Volkswagen in September 2015.

The settlement covers 48 US states, Puerto Rico and the District of Columbia. Under its terms, Mercedes-Benz will pay $149.6 million and provide payments of $2,000 to eligible owners and lessees of vehicles that received required emissions repairs. The automaker also committed to implementing a series of compliance measures aimed at preventing future misconduct and meeting ongoing oversight requirements, according to the states.

State investigators concluded that Mercedes installed undisclosed and unlawful software in certain diesel vehicles that concealed their true pollution levels. The software was designed to improperly reduce emissions during government testing, while under normal driving conditions, the vehicles were found to emit pollutants at levels up to 30 or 40 times the legal limit.

Virginia Attorney General Jason Miyares said the settlement applies to an estimated 39,565 vehicles in the United States that, as of August 2023, had not been repaired or permanently removed from the road. Mercedes is required to cover the costs of installing approved emissions modification software on each affected vehicle, provide consumers who participate in the program with an extended warranty, and pay $2,000 per vehicle to eligible owners and lessees.

A spokesperson for Mercedes-Benz said the settlement would not affect the group’s bottom-line earnings, adding that sufficient provisions had already been made to cover the overall costs. The company noted that the agreements remain subject to final court approval.

The latest deal follows an earlier resolution reached in 2020, when Mercedes-Benz agreed to pay $2.2 billion to settle a US government investigation into diesel emissions cheating as well as claims from about 250,000 US vehicle owners.

As part of the newly announced settlement with the states, Mercedes must immediately pay $120 million. An additional $29.6 million has been suspended and will be reduced by $750 for each affected vehicle that the company repairs, removes from the market, or buys back.

The states’ investigation into Mercedes-Benz was launched in 2020 in the wake of the Volkswagen diesel emissions scandal, which ultimately cost Volkswagen more than $20 billion in fines, penalties and settlements after it admitted in 2015 to cheating emissions tests by installing so-called defeat devices and sophisticated software in nearly 11 million vehicles worldwide.

Legal fallout from the scandal continues to affect major automakers. Mercedes-Benz still faces potential additional liabilities, including in England, where it is among several companies — alongside Ford, Nissan and Renault — named in a mass lawsuit launched in October.

By Tamilla Hasanova