Daimler AG, Mercedes-Benz parent, was accused of selling more than 1 million diesel-powered cars equipped with a cheating device.

While Daimler AG was chalking up the oohs and aahs in Las Vegas for its flashy concept vehicle that was done up with an assist from one of Hollywood’s most famous directors, a group of hard-hearted gnomes back in Germany were preparing another surprise for the automaker.

A group of institutional investors filed a billion-dollar lawsuit in German courts in Stuttgart, claiming the company had failed to disclose the full extent of its emission-connected liabilities.

The legal action against the German automaker was filed on behalf of institutional investors who are accusing Daimler of failing to inform investors about the risks. A similar suit also likely to be filed in the U.S. once investors in the U.S.

(Daimler plans major job losses to offset coming expenses)

Daimler has been caught up in slow-moving version of Volkswagen’s diesel scandal, which has cost the company more than $32 billion since it began in September 2015.

Daimler already faced two diesel lawsuits before the new investor suit.

Since the Daimler began sinking into its own version of Dieselgate, Daimler’s share price has dropped by almost one third and contributed to the company’s loss in the second quarter.

In the third quarter financial report, Daimler also warned that investigations and lawsuits could cut into the company’s earnings in the future.

“As reported in the risk and opportunity report, Daimler is subject to governmental information requests, inquiries, investigations, administrative orders and proceedings as well as court proceedings in connection with diesel exhaust emissions,” the company noted in its quarterly financial report.

The report noted that legal proceedings are fraught with a large degree of uncertainty, it is possible that in the context of their final resolution some of the provisions we have recognized for them could prove to be insufficient.

As a result, additional expenditures may arise, which may negatively affect the profitability expectations mentioned below, in particular of the divisions Mercedes-Benz Cars and Mercedes-Benz Vans.

(German prosecutors mulling $1.2B diesel fine for Daimler AG)

Last summer, Daimler said owners of Mercedes-Benz vehicles could apply for a 3,000 euro or $3,350 subsidy to upgrade the exhaust filters of older, polluting diesel vehicles.

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.

Dieter Zetsche, left, handed over the top job at Daimler AG to Ola Kallenius, right, who will now have to deal with the company’s ongoing diesel problems.

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.

Daimler has adamantly denied ever using the defeat device in Europe or anywhere else. Nonetheless, the cost recalls and other expenses related to the shift away from diesels already cost Daimler more than $2 billion and the expenses are continuing to climb.

Daimler launched a website last summer to process applications for financial support, as German motor authority KBA seeks to approve an after-market 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. The cost of backing out of passenger cars equipped with diesel engines continues to grow for Daimler AG.

(Cost of Dieselgate Continues to Rise for Daimler AG)

In June, KBA ordered Daimler to expand its recall program to retrofit vehicles illegally fitted with emissions-cheating software.

Don't miss out!
Get Email Alerts
Receive the latest Automotive News in your Inbox!
Invalid email address
Send me emails
Give it a try. You can unsubscribe at any time.