German police raid Daimler

Daimler, the parent company of Mercedes-Benz and smart, is right where it didn’t want to be: under the glare of an illegal diesel emissions investigation.

More than 230 police and 23 representatives from the public prosecutor’s office raided 11 Daimler sites around Germany yesterday, including its headquarters in Stuttgart.

The raids come less than two years after Dieselgate began wiping billions of euros from Volkswagen’s market capitalisation, costing the Wolfsburg company more than $US20 billion in fines and settlements for using software to illegally manipulate NOx emissions during official testing.

Daimler declined to comment today on the searches, aside from confirming they took place, though it decried the accusations as spurious when the initial stages of the investigation became public in March this year.

“There is a suspicion of fraud and false advertising in relation to the manipulation of exhaust treatment in diesel passenger cars,” Stuttgart’s prosecutors’ office said today.

While senior officials and board members are not among the Daimler suspects, prosecutors suggested they had found evidence that several employees may have engaged in fraud and false advertising.

The investigation relates to “thermal switching” software (which is what Daimler calls it, while clean-air lobby group Transport Environment calls it a Thermal Window Defeat Device).

The system turns off the full NOx emissions-cleaning software below 10 degrees Celsius and above 26 degrees. It is ostensibly sending the cars through a loophole in the NEDC test regime, which allows manufacturers to protect the integrity of the engines and emissions-cleaning systems under unusual circumstances.

It wasn’t the worst, with Renault’s Thermal Switch kicking in below 17 degrees and above 35, though the French car-maker agreed under pressure to move the switching trigger points to five degrees and 40 degrees.

The “thermal switching” strategy came to light when independent testing on a six-degree day found a Mercedes-Benz C-Class diesel emitting six times the legal limit.

Daimler CEO and Chairman Dieter Zetsche defended the Thermal Switching system, insisting: “We are not cheating at Daimler, we have not manipulated any emissions levels,” he said early last year.

“We had a lot of leeway when it comes to legislation,” Mr. Zetsche said. “If you don’t exploit such leeway, you can be accused of embezzlement at the expense of your shareholders.”

However, Daimler was one of several carmakers, including Opel, Renault, Porsche, Volkswagen and Audi, forced by the German Transport Department (KBA) to recall 630,000 cars to close the loophole, even though they all stressed they’d technically done nothing wrong. For Daimler’s part, it had to recall 247,000 cars.

It is also the subject of a class-action emissions-cheating lawsuit in the United States and the US Department of Justice last year demanded Daimler probe its diesel emissions in the wake of Dieselgate.