A coalition of attorneys general in the United States announced on Monday that Mercedes-Benz USA and its parent company, Daimler AG, have agreed to a $149.6 million settlement. This resolves allegations that the German automaker secretly installed software devices in its diesel vehicles to cheat on emission tests.
The Core of the Allegations: Defeat Devices in Diesel Cars
According to the officials, between 2008 and 2016, Mercedes equipped more than 211,000 diesel passenger cars and vans with software often called "defeat devices." This software was programmed to detect when a vehicle was undergoing official emission testing. During these tests, it would activate full emission controls to pass. However, during normal driving conditions, these controls were significantly reduced.
This manipulation allowed the vehicles to emit nitrogen oxides (NOx) far beyond legal limits. NOx is a harmful pollutant linked to respiratory illnesses and is a major contributor to smog. The states argued that Mercedes resorted to this deception because it was struggling to meet its own design and performance goals, like fuel efficiency, while also complying with strict US emissions standards.
Marketing "Green" Cars While Hiding the Truth
The coalition further alleged that Mercedes-Benz actively concealed the existence of these devices from both state and federal regulators and the buying public. While the software was in use, the company marketed these diesel vehicles as "environmentally friendly" and fully compliant with all emission norms. This dual strategy of secret cheating and public green marketing formed the basis of the legal action.
It is important to note that this agreement is still subject to court approval. This settlement is separate from a previous $1.5 billion agreement Daimler AG and Mercedes-Benz USA reached with the US government and California regulators in 2020 over the same scandal.
Terms of the Settlement and Consumer Relief
The coalition announcing the settlement comprised fifty attorneys general, including those from the District of Columbia and Puerto Rico. Notably, California was not part of this specific group.
The terms of the settlement are multi-faceted. The automaker will pay $120 million directly to the attorneys general. An additional $29 million payment is suspended and may be waived if Mercedes successfully completes a consumer relief program.
This program targets approximately 40,000 vehicles that still had the illegal software installed and were not repaired or taken off the road by August 1, 2023. Owners of these eligible vehicles can receive $2,000 per vehicle if they get approved emissions modification software installed and accept an extended warranty.
Furthermore, Mercedes-Benz must comply with strict reporting requirements and is prohibited from any future unfair or deceptive marketing or sales practices related to diesel vehicles.
In a statement, Mercedes-Benz said this deal resolves all remaining US legal proceedings tied to diesel emissions. However, the company maintained its position, stating it considers the accusations unfounded and denies any liability. The automaker added it has made "sufficient provisions" to cover the settlement costs.
This case echoes the larger Volkswagen "Dieselgate" scandal, where Volkswagen paid billions, including a $2.8 billion criminal penalty, for similar emissions cheating practices.
