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Dieselgate scandal costs Daimler additional €1.5 billion

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Via Deutsche Welle

The consequences of the “Dieselgate” scandal cost Daimler up to €1.5 billion ($1.66 billion) last year, the German carmaker announced on Wednesday.

The Stuttgart-based maker of Mercedes-Benz said in a statement that it expects its earnings before interest and taxes (EBIT) to amount to €5.6 billion for 2019.

That figure does not include the “anticipated additional expenses for ongoing governmental and court proceedings and measures relating to Mercedes-Benz diesel vehicles,” the company said.

Daimler estimated that the additional costs for covering legal disputes and massive car recalls would cost the company between €1.1 billion to €1.5 billion.

Those estimates come on top of the €1.6 billion that the company set aside for the scandal last year.

Operating profit plummets

The extra costs for covering the fallout of the emissions cheating scandal mean that the 2019 results would fall below earnings expectations.

The figure is a steep drop from the €11.1 billion operating profit it made in 2018.

News of Daimler’s preliminary figures hit the company’s stock on the blue-chip DAX index in Frankfurt on Wednesday morning, falling by 0.5% to €46.18 even as the DAX, overall, hit a record high.

Germany’s motor vehicle authority KBA ordered a recall on almost 1 million Daimler vehicles, although the company insists that none of the “motor control functions” are illegal.

In a bid to save €1.4 billion by 2022, Daimler’s board chairman Olla Källenius has been pursuing a cost-cutting program. The company plans to already cut 10,000 jobs as well as cap investment.

German car giants Volkswagen, Daimler and others have been accused of violating environmental regulations and manipulating software to make emissions from diesel vehicles lower in tests than they actually are on the road.

Dieselgate erupted in September 2015 when Europe’s biggest carmaker Volkswagen admitted to installing so-called “defeat devices” in 11 million vehicles worldwide that allowed them to cheat emissions testing.

rs/sms (AFP, dpa)

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