(and not just about cars!!!!)

Volkswagen AG, Daimler AG and BMW AG agreed to upgrade more than 5 million newer diesel cars in Germany and offer trade-in rebates on older models, avoiding more costly remedies in a bid to salvage diesel technology and avoid driving bans in cities.

The recalls, hashed out at an emergency summit in Berlin on Wednesday, will cost about 500 million euros ($593 million) and largely sticks to commitments that the automakers had already made. The deal allows them to dodge expensive hardware recalls, which would have ballooned costs. Meanwhile, about half the fixes have already been carried out as part of Volkswagen’s response to its cheating scandal. 

“What the agreement doesn’t do is restore consumer confidence in diesel engines,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “Two years into the VW diesel scandal, having learned about the shortcomings of bench emission testing and ways to trick the system, consumers rightly demand new technologies.”

Top executives from the German auto industry were summoned to face off with ministers and state leaders amid a steady drumbeat of negative news about diesel pollution, dialing up concerns over the technology’s impact on urban air quality. The manufacturers agreed to absorb the costs of the upgrades, which they said wouldn’t diminish performance, fuel usage or durability.

Recall breakdown by automaker:
•Volkswagen - 3.8 million vehicles
•Daimler - 900,000
•BMW - 300,000

The aim of the fixes, which also involve vehicles from PSA Group’s Opel and some other brands, is to cut emissions of smog-inducing nitrogen oxides by 25 percent to 30 percent on average, German auto industry lobby VDA said in a statement. The bulk of the costs to the industry will come from incentives for scrapping older models. While overall details were unavailable, BMW outlined plans to offer 2,000-euro trade-in bonuses.

“I understand that many people think that the German car industry is the problem,” Daimler Chief Executive Officer Dieter Zetsche said in an emailed statement. “It’s our job to make clear that we’re part of the solution.”

There’s a lot at stake for all sides. German automakers need diesel as a stop-gap technology to buy time to catch up with the electric offerings of Tesla Inc. and Nissan Motor Co. And with less than two months until a federal election, Chancellor Angela Merkel, whose ruling bloc runs the ministry overseeing carmakers, has to ward off criticism that the government is too lenient on carmakers while also not endangering the country’s 800,000 auto jobs.

:Bloomberg Europe