Mercedes recalls cars over emission "shutdown devices"

Over 700,000 Mercedes cars recalled

German authorities have been cracking down on manufacturers since the Volkswagen Dieselgate scandal first besmirched the reputation of its domestically produced vehicles.

The Kraftfahrt-Bundesamt said 238,000 vehicles in the country have unauthorised software fitted and has demanded that they are fixed immediately by the auto maker.

This latest development follows news a year ago that saw Daimler accused of selling over one million cars with excess emissions in Europe and the USA, following earlier reports in the German media.

"The federal government will order an immediate official recall because of illegal defeat devices", Transport Minister Andreas Scheuer said in a statement.

The KBA mentioned that it believed Daimler had equipped the device in the majority of its "Euro 6" classified diesel engines, meaning that at minimum, vehicles manufactured after September 2014 when the pollution standard became effective.

The company had earlier said that it contested the legal basis for the finding that the Vito's engine controls were disallowed.

Recent weeks have seen Germany´s KBA vehicle licensing authority hit Volkswagen subsidiaries Audi and Porsche with mass recall orders over their engine control software, as well as a smaller batch of cars from rival BMW.

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The main offenders in this case are diesel-powered versions of the Mercedes-Benz C-Class sedan, GLC SUV as well as Vito commercial vehicle.

Daimler hasn't denied the existence of the functions, but have refuted the suggestion that they are illegal.

The ordered recall follows Daimler's decision to voluntarily recall three million vehicles in the European Union previous year to perform software updates and improve emissions performance.

That said, it has pledged to remove the software and to cooperate with authorities, the ministry said.

'For the existence of the relevant test cycle NEDC, the specific programming in question is not required'.

Evercore estimates the recall will cost Daimler less than €100 million ($155.33m), helped by the fact no fines are now being imposed.

'Overall, this outcome should de-risk the stock'.

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