Dive Brief:
- Mercedes-Benz Group and its U.S. business will pay up to $149.6 million to 48 states, Puerto Rico and the District of Columbia to settle litigation with their attorneys general centered on software the automaker installed in its vehicles to dodge emissions standards, according to Monday press releases.
- The settlement required Mercedes to immediately pay $120 million to the states, with the remaining $29.6 million suspended. The settlement also requires Mercedes to pay $2,000 to owners and lessees of the affected vehicles who bring their vehicle up to emissions standards.
- Mercedes had installed the emissions-cheating devices in more than 200,000 diesel-powered vehicles between 2008-2017, according to the settlement agreement. Over 39,000 of the vehicles remained on the road as of August 2023, South Carolina’s AG office said in a release.
Dive Insight:
The settlement resolves multi-state litigation that resulted from Mercedes equipping the diesel-powered models with a software that allowed the vehicles to pass U.S. emissions tests. Mercedes became suspected of using the software in 2018 and has already settled other litigation over the issue with the states of Arizona and California — which were not party to the settlement agreement announced Monday — as well as the U.S. Department of Justice and Environmental Protection Agency.
Mercedes said the settlement “resolves all material remaining legal proceedings related to diesel emissions in the U.S.” The automaker said in a statement Monday that the settlements allow it to avoid costly court time, but maintains the accusations are “unfounded” and denies any liability.
The settlement applies to 15 models of BlueTEC II Diesel passenger cars and vans with model years from 2009-2016, according to the settlement. The covered vehicles were defined in a prior consent decree with California.
“Mercedes marketed these vehicles as ‘environmentally friendly’ not because it was true, but because that message played well,” Alaska AG Stephen Cox said in a release. “That kind of false virtue-signaling isn’t harmless: it deceives regulators and consumers, and it breaks the law. This settlement makes clear that behavior has consequences.”
Mercedes will also be required to give eligible consumers an extended warranty, which Washington AG Nick Brown said Monday are worth an estimated $1,200 each, in addition to $2,000 for bringing the vehicles up to emissions standards. The total value of the settlement could reach $347 million, Brown's office said in a press release.
The automaker said in its statement that it has made “ sufficient provisions for the expected total costs of the multistate group settlements.”
For each affected vehicle Mercedes is able to repair, buy back or take off the market, it will reduce the automakers suspended $29.6 million penalty by $750, according to the settlement agreement. The company is also prevented from selling any future diesel vehicles with similar standards-dodging devices.
Mercedes’ $120-million payment to the states was divided based on the approximate number of impacted vehicles sold in the state.
The emissions-cheating software was developed by German engineering company Robert Bosch GmbH, which was required to pay $98.7 million to U.S. states in a 2019 settlement. Automakers Volkswagen and Fiat Chrysler have also settled litigation over their use of the software: Volkswagen settled for $570 million in 2016, and Fiat settled for $72.5 million in 2017.
