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DAIMLER has become the third car-maker to be sued by US regulators for allegedly cheating on diesel emission tests covering 250,000 Mercedes-Benz diesel cars and vans sold in the US.

The total cost to Daimler could be more than $A4 billion.

These latest charges are expected to cost Daimler $US1.5 billion ($A2.08 billion) but are in addition to a separate $US700 million ($A970 million) claim from plaintiffs in the US state of New Jersey and a possible further $US1 billion ($A1.38 billion) from German investors who claim the car-maker – which denies the accusation – had concealed the use of emission-cheating software.

In the latest US charge, Daimler said it had agreed to a settlement. The payment would be spread over the next three years.

The settlement addresses civil lawsuits and environmental claims rooted in misleading emission labeling on 250,000 diesel passenger cars and vans in the US and have been brought by the US Environmental Protection Agency, the Department of Justice, the California Air Resources Board and California Attorney General Xavier Becerra.

In a statement, Daimler said: “With the proposed settlement, the company takes an important next step towards legal certainty with respect to various diesel proceedings in the US.”

The agreement between US authorities and Daimler, parent of Mercedes-Benz, comes five years after Volkswagen admitted to using engine control devices to cheat on diesel emission tests for its vehicles in the US.

To date, it has cost Volkswagen 30 billion euros ($A49.3 billion) in fines, penalties, repurchasing vehicles and other costs.

Daimler also expects to spend about $US700 million ($A970 million) to settle a class action lawsuit in US District Court for New Jersey brought by owners of diesel-engine models. This action has yet to be approved by the court.

Investors in Germany are also suing Daimler for $US1 billion ($A1.38 billion), accusing it of concealing the use of emissions cheating software. The company denies the allegations.

Fiat Chrysler Automobiles last year settled similar charges by US regulators and diesel owners for about $US800 million ($A1.1 billion). FCA also faces an ongoing criminal investigation regarding its diesel emissions testing.

The three car-makers’ diesel emission testing procedures and software applications are said to be the main reason for the plunge in demand for diesel passenger cars, SUVs and light-commercial vehicles in the US. The US has a higher tax rate on diesel and so reduces its fuel cost advantages.

Diesels remain popular in Europe, mainly because the tax on the fuel is less than the equivalent tax on petrol but diesel sales in Europe are sagging fast.

By Neil Dowling

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