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Investment Recovery

Daimler en

Since May 2018, Germany’s road vehicle authority (“KBA”) has issued several recall orders after claiming to have discovered defeat devices in Daimler vehicles.

Daimler is a German multinational automotive corporation headquartered in Stuttgart. It is the 13th largest car manufacturer and the largest truck manufacturer in the world.

In a statement on 26 September 2015, just days after the VW ‘Dieselgate’ scandal had come to light, Daimler’s CEO, Dieter Zetsche stated publicly that a “function that limits emissions treatment performance was not used in Mercedes-Benz vehicles.” However, since May 2018, Germany’s road vehicle authority (“KBA”) has issued several recall orders after claiming to have discovered defeat devices in Daimler vehicles.

Daimler continues to deny that the identified software is a prohibited defeat device and has chosen to appeal the KBA decisions, but at the same time is complying with the recalls and is modifying the implicated software. Investigations are ongoing.

Daimler has also been subject to a fine of EUR 870 million by the Stuttgart prosecutor’s office in September 2019 in relation to the certification of diesel vehicles that did not meet regulatory requirements in terms of NOx emissions output. Consumer cases against Daimler are currently ongoing in Germany. A first appeals court decision in September 2020 came out in favour of the claimant and may lead to a wave of litigation against the company in Germany. A decision by the highest German civil court (Bundesgerichtshof) is expected later this year.

On 22 January 2020, Daimler issued its fourth profit warning in less than a year, stating that 2019 profits would be affected by up to EUR 1.5 billion in litigation costs and that earnings before tax would drop by 50% to EUR 5.6 billion.

In the US, on 13 August 2020, Daimler AG and its US subsidiary Mercedes-Benz USA LLC announced they had reached an agreement to settle civil and environmental claims relating to defeat devices in approximately 250,000 vehicles. On 14 September 2020, US authorities, including the Department of Justice (DOJ), confirmed this settlement. Daimler expects to pay approximately USD 1.5 billion in settlements with US regulatory authorities and a further USD 700 million to settle a pending class action before the US District Court for the District of New Jersey. The agreement is pending final approval by the courts.

In the proposed consent decrees and class action settlement, Daimler does not admit wrongdoing in relation to the allegations that it used defeat devices in 250,000 US vehicles. Furthermore, the settlement amount corresponds to the figure that Daimler had already set aside as costs for the Dieselgate scandal, and it is questionable whether the threshold of materiality for a successful investor claim against Daimler is currently met.

Deminor recommends that clients register their claims with the German model case proceeding in Stuttgart once the model plaintiff has been named, likely in the second half of 2020. This will have the effect of tolling the statute of limitations, while preserving the possibility to issue proceedings once further evidence against Daimler emerges, and some of the key outstanding questions are resolved.

Company name

Daimler AG

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Relevant period

10 July 2012 - 11 October 2019 (subject to change)

Contact persons

✉️ Edouard Fremault
✉️ Felix von Zwehl

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