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Daimler's Mercedes to Recall More Than 660K Vehicles in China

Daimler AG’s DDAIF Mercedes is set to recall more than 660,000 vehicles in China by the end of this year over possible oil leak. A seal between a high-pressure fuel pump and a low-pressure fuel pipe could break over time, which would cause oil to leak when the engine starts in cold weather.

The recall, which will cover 668,954 vehicles, will begin on Dec 18. It includes several models, including C-class, E-class, V-class, GLK-class, CLS-class, SLC-class, GLC SUV and VS20 VITO vehicles, produced between February 2013 and June 2017.

Beijing Benz Automotive Co. made most of the vehicles in China and Fujian Benz Automotive Co. designed about 12,500 and imported 36,000 vehicles. Reportedly, dealers will replace the defective parts for free.

The report followed another recall, which began last month, of 4,653 imported Mercedes G-class sedans with inaccurate child-safety lock labels. The vehicles were manufactured between Feb 14, 2018 and Sep 24, 2019.

Meanwhile, Mercedes recently arrived at a mutual agreement to temporarily put on hold its partnership with BMW AG BAMXF to jointly develop the next-generation automated driving technology. The partnership, announced last July, was aimed at developing driver assistance systems, fully-automated driving on highways, and automated parking, with the first cars fitted with the technology scheduled for a 2024 launch. However, the companies announced indefinite suspension of the alliance, citing elevated costs and unfavourable economic circumstances. The two firms also stressed that this cooperation might be resumed at a later date.

Nevertheless, Mercedes and BMW will continue to work together in other areas, including their 2015 alliance with Audi on the consortium of ‘Here’ — a mapping and location data company. In addition, Daimler and BMW will continue to work on the merger of short-term rental services Car2Go and DriveNow, in a bid to expand their footprint in the developing mobility market.

Zacks Rank and Stocks to Consider

Daimler currently carries a Zacks Rank #3 (Hold). Shares of the company have depreciated 23.8%, year to date.

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