Market Overview

Daimler Halts Truck Engine Sales Over Dieselgate Fears

Share:
Daimler Halts Truck Engine Sales Over Dieselgate Fears

In many ways, the "Dieselgate" scandal of 2015 had come to redefine the credibility of the auto industry of Germany, as auto major Volkswagen admitted to using an illegal software patch to help its diesel engines to cheat emissions tests. The industry has been toeing the line of fire ever since, with the limelight falling on Volkswagen's luxury car segment Audi (OTCMKTS: AUDVF) and its competitor Daimler (OCTMKTS:DDAIF).

Quite recently, Audi's CEO Rupert Stadler was arrested on charges of suppressing evidence relating to the emissions test scandal. When the scandal broke out, Audi recalled its A6 and A7 models en masse while alluding to emissions irregularities as the reason for the recall.

The problem lay in the restrictive use of a chemical additive called AdBlue, which is used to neutralize emissions of nitrogen oxide — a gas which is a primary source of vehicular air pollution. The reagent AdBlue came in a tank that was much smaller than desired, which meant that customers who bought the vehicle would have to frequent the service stations to fill up the reagent.

To circumvent the problem, engineers at the auto major regulated the flow of AdBlue to prolong it at its dying stages, thus making sure the supply would last much longer than initially intended. This meant that nitrogen oxide exhaust levels exceeded the ceiling threshold, leading to the scandal that ensued. This led to Volkswagen settling in the U.S. court to the tune of $15 billion, which the company considers to be a significant milestone in its road to atonement.

On a similar note, Daimler - albeit a separate auto entity to Volkswagen and Audi - was also suspected of similar practices with its AdBlue reagent and had come under scrutiny over the years. Last month, the Transport Ministry of Germany confirmed that 774,000 Mercedes-Benz vehicles in Europe were found to be running with unauthorized "defeat" devices and had instructed Daimler to pull out 238,000 cars running on the German roads.

MarketWaves.png

In the wake of this, Bild am Sonntag, a local news outlet in Germany ran an article yesterday about Daimler identifying software patches that could stop the flow of AdBlue under certain circumstances on its OM 501 truck engine. Daimler refuted these claims in its statement, and mentioned that the onboard diagnosis system on the engine would regulate the injection of AdBlue only during circumstances when the truck ran on biodiesel. They reasoned that this was a measure taken to avoid excessive AdBlue addition to biodiesel exhaust which would lead to the release of ammonia, causing respiratory problems.

Then again, the company did mention in a thinly-veiled statement that it found "isolated situations" during the course of its regulatory tests where V6 heavy-truck engines of the Euro V standard "slightly exceeded the relevant NOx limits." The engine which is in circulation only in non-European markets since 2013, would now have its supply stopped globally till the technical issues have been clarified and the engine stops being in the red.

Daimler is walking on thin ice at the moment, with it being sued this June by a shareholder who alleged the auto manufacturer to have misled investors by holding back the severity of its diesel emissions problems that seemed to cut parallels with the Volkswagen episode. Daimler CEO Dieter Zetsche bailed the company out from expensive fines over this incident, after extensive talks with the German Transport Minister last month. Following the meeting, the company has decided to upgrade its diesel emissions software in the C-class sedan, GLC SUV, and Vito van models.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.

Posted-In: FreightGovernment News Regulations Topics General

 

Related Articles

View Comments and Join the Discussion!

Mixed Drinks: Combined Keurig Dr Pepper Debuts On NYSE

Spotify Could See Trouble In Label Renegotiations, Engagement Efforts