The cost of backing away from passenger cars equipped with diesel engines continues to grow for Daimler AG.
Daimler said this week Mercedes-Benz customers in Germany could apply for a 3,000 euro or $3,350 subsidy to upgrade the exhaust filters of older, polluting diesel vehicles.
The expensive repair by is only the latest effort by German carmakers to avoid inner-city bans in their home country, according to the German media.
Carmakers have been forced to consider upgrading exhaust treatment systems on older cars after German cities started banning heavily polluting diesel vehicles to cut fine particulate matter and toxic nitrogen oxides.
For Daimler, the offer to fix older models with diesel engines is only the latest development in a problem that is growing steadily more expensive for Daimler.
In June, Germany’s auto industry regulator, KBA, ordered Daimler to expand its recall program to retrofit vehicles illegally fitted with emissions-cheating software, Germany’s Bild newspaper reported.
Daimler has already been told to recall 700,000 diesel vehicles worldwide, including 280,000 in Germany, in connection with the Dieselgate scandal. KBA now insists that another 60,000 cars be added to the list, the tabloid said.
The fallout from “Dieselgate” has caught into Daimler’s earnings, contributing to the company’s $1-billion loss in the second quarter.
Dieselgate began in September 2015, when Volkswagen admitted to installing so-called “defeat devices” in 11 million vehicles worldwide that allowed them to cheat emissions testing.
VW has already incurred costs of €29 billion, or $33 billion, related to the scandal, much of that in the United States by way of fines, compensation and buyback schemes.
Daimler has adamantly denied ever using the defeat device either in Europe or anywhere else. Nonetheless, the cost of recalls and other expenses related to diesel engines cost the company more than $2 billion and the expenses are continuing to climb quickly.
Daimler launched a website this week to process applications for financial support, as KBA seeks to approve an aftermarket kit to upgrade the exhaust systems on various Mercedes diesel passenger vehicles.
German carmakers initially offered software updates and shied away from endorsing hardware retrofits, instead lobbying for customers to buy new cars with cleaner engines.
But consumer groups pressured carmakers to endorse retrofits as a more cost-effective measure.