Daimler AG to modify engine software on over 3 mn diesel vehicles

Daimler AG said yesterday that it would tweak the engine software on over three million diesel vehicles to improve emissions amid probes in the US and Europe into allegations that the maker of Mercedes-Benz cars cheated on emissions.

Daimler did not call its "service action" a recall, but the move was reminiscent of Volkswagen AG's recall of nearly 11 million vehicles world-wide following the emissions-cheating scandal. The Volkswagen scandal helped raise awareness of toxic pollution from diesel vehicles, and led more European cities to weigh banning diesel vehicles.

Meanwhile, regulators and criminal investigators in US and Europe are scrutinising Mercedes-Benz on suspicion that some of its diesel vehicles used illegal defeat devices, an allegation raised by environmental groups that Daimler had denied. 

In Germany, public concern over diesel bans had led to a sharp drop in diesel sales and forced chancellor Angela Merkel's government to create a round table to encourage the auto industry to adopt voluntary measures to curb diesel pollution and prevent cities from banning diesel vehicles.

"The public debate about diesel engines is creating uncertainty - especially for our customers," Daimler chief executive Dieter Zetsche said in a statement. "We have therefore decided on additional measures to reassure drivers of diesel cars and to strengthen confidence in diesel technology."

According to commentators, the automaker would extend an ongoing upgrade of about 250,000 compact cars and vans to nearly every modern Mercedes diesel on the road. The plan, which involved a software patch and avoided complex component fixes, is expected to cost around 220 million euros ($255 million), the Stuttgart, Germany-based company said in a statement yesterday.

Daimler would be able avoid the massive penalties that beset VW, if officials were to accept it.

''This is about managing diesel's decline as gently as possible and to get a little bit of reprieve,'' said Arndt Ellinghorst, a London-based analyst with Evercore ISI, Bloomberg reported. ''That's not going to change the fundamental direction of the shift in technology.''