DaimlerChrysler gets record fuel economy fine

Mercedes-Benz cars draw $30.3 million penalty for violating fuel economy standards.

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By Peter Valdes-Dapena, CNNMoney.com

mercedes_headlights.03.jpg
Mercedes-Benz S-class sedan

NEW YORK (CNNMoney.com) -- DaimlerChrysler has been hit with the largest fine ever assessed against any company for violating fuel economy standards set by the federal government.

The automaker was split into two companies last year when its Chrysler division was purchased by a private equity firm.

The fine of $30.3 million was assessed for 2006 model year imported passenger cars. That means the fine was assessed almost entirely against the company's Mercedes-Benz luxury cars. The only imported car sold as a Chrysler was the German-built Crossfire sports car.

For the 2006 model year, the average fuel economy of passenger cars imported by DaimlerChrysler - as measured for "corporate average fuel economy," or CAFE, purposes - was 24.8 miles per gallon. The government requires an average of 27.5 mpg.

The fine for violating CAFE standards is $5.50 for ever tenth of a mile under the 27.5 mpg goal, multiplied by the number of vehicles imported. The record fine is nearly double the $16,895,472 the company had to pay for the 2005 model year.

The fuel economy figures used by the National Highway Traffic Safety Administration (NHTSA), which administers the CAFE program, are calculated differently from Environmental Protection Agency fuel economy figures shown on vehicle window stickers. In general, NHTSA's CAFE figures are about 25 percent higher, according to the EPA.

The target of 27.5 mpg is the same for domestic and imported cars, but averages for domestic and imported cars are tabulated separately.

The fine assessed against DaimlerChrysler surpassed the previous record $28 million fine against BMW for the 2001 model year. For the 2006 model year, BMW was hit with the second-biggest fine, but at about $5 million it was much lower than DaimlerChrysler's.

No American or Asian car company has ever had to pay a fine for violating government CAFE standards. Only European car companies, which mostly sell luxury and performance-oriented cars here, have had to pay such fines - and many do so routinely

Representatives of Mercedes-Benz USA and Chrysler LLC did not immediately respond to requests for comments on the fine. Since the fine was assessed against the combined DaimlerChrysler, it is not clear what portion of the fine, if any, Chrysler LLC will have to pay.

Cars produced in Canada and Mexico are counted as domestic products under fuel economy regulations. To top of page

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