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Daimler (DDAIF) Imposed With $30M Fine for Delayed Recalls

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Daimler AG’s (DDAIF - Free Report) North American truck arm has agreed to pay a $30-million U.S. civil penalty to resolve an investigation of delayed recalls.

The National Highway Traffic Safety Administration (NHTSA) had opened an investigation in April 2018 for roughly 464,000 vehicles, covering Daimler Truck’s handling of seven recalls. Per the investigation results, Daimler Trucks North America had failed to recall vehicles promptly and adhere to the reporting requirements.

Per NHTSA, it is imperative for manufacturers to recognize the urgency of their safety recall responsibilities, and provide timely and accurate information to the agency about all safety issues.

As part of the settlement, Daimler Trucks has agreed to develop and implement an advanced data analytics program to augment its ability to identify and solve potential safety malfunctions. This forms part of a two-year consent order that can be further extended by NHTSA for an additional year.

Daimler Trucks has agreed to pay $10 million upfront and will outlay an additional $5 million on projects aimed at strengthening vehicle safety. The agreement includes a $15-million deferred fine that can become payable if the automaker fails to obey the consent order. Also, Daimler Trucks has agreed to meet the NHTSA on a monthly basis as part of the settlement.

This is the second time since late 2019 that the German automaker has agreed to settle a scrutiny by U.S. auto safety regulators by paying a penalty. In December 2019, Daimler’s Mercedes-Benz agreed to pay a fine of $20 million to NHTSA due to its mishandling of U.S. vehicle recalls, including a failure to notify owners timely and submit all the required reports.

Daimler AG with its businesses Mercedes-Benz Cars, Daimler Trucks, Daimler Financial Services, Mercedes-Benz Vans and Daimler Buses, is globally a leading producer of premium passenger cars and one of the largest manufacturers of commercial vehicles in the world.

Daimler Trucks claims to be focused on developing safe and reliable commercial vehicles. Moreover, the company states that there are no reported accidents or injuries related to any of the delayed recalls in the latest scrutiny.

Reportedly, Daimler is considering an IPO for its truck unit in late 2021, in order to unlock the true value of the company’s truck segment. By trading separately from its auto business, Daimler Trucks could command a higher valuation as the business is working on some advanced and innovative technologies, like collaborating with Google (GOOGL - Free Report) parent Alphabet’s Waymo on Level 4 driverless truck technology and Linde on on hydrogen refueling technology.

Daimler, peers of which include BMW AG (BAMXF - Free Report) and Honda (HMC - Free Report) , currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, shares of the company have appreciated 28.5% in the past year, while its industry has witnessed a rise of 19.3%.

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