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Daimler To Pay $30M Penalty for Delayed Truck Recalls
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Daimler To Pay $30M Penalty for Delayed Truck Recalls

Daimler said Thursday that it agreed to pay a $30 million penalty for failing to recall its vehicles in a timely manner and not complying with reporting requirements.

The US National Highway Traffic Safety Administration (NHTSA) released a consent order that includes both monetary and non-monetary provisions designed to improve Daimler’s (DDAIF) compliance and safety practices.

The terms of the consent order require Daimler to make an upfront payment of $10 million, an additional $5 million will be spent on specific safety enhancing projects and the remaining $15 million will be deferred and may become payable under specified circumstances.

Furthermore, Daimler will need to develop and implement an advanced data analytics program to improve its ability to detect and investigate potential safety defects.

IT systems will need to be improved and employees will need to be properly trained on the recall and reporting requirements of the Vehicle Safety Act, so that regular reporting of safety issues to the NHTSA is conducted accurately.

“Safety is NHTSA’s top priority,” said NHTSA Deputy Administrator James Owens.  “It’s critical that manufacturers appropriately recognize the urgency of their safety recall responsibilities and provide timely and candid information to the agency about all safety issues.” (See DDAIF stock analysis on TipRanks)

Morgan Stanley analyst Harald Hendrikse this week reiterated a Buy rating on the stock and set a price target of $73.85. This implies upside potential of around 5% from current levels.

Hendrikse believes that a fundamental business recovery in the automotive sector has already been priced in, but that an expected surge in sales will be an individual driver for Daimler.

Overall, consensus among analysts is a Moderate Buy based on 12 Buys, 8 Holds and 1 Sell. The average price target of $73.22 suggests upside potential of around 4% over the next 12 months.

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