The Department of Justice said that Mercedes-Benz USA and parent DaimlerChrysler AG will pay $US1.2 million ($A1.53 million) to settle allegations that they failed to report air pollution problems with Mercedes-Benz vehicles to federal regulators. As a result of the complaint brought by the government, Mercedes-Benz USA has issued voluntary recalls for more than 100,000 vehicles and extended warranties to address the defects, at an estimated cost of $US59 million ($A75.35 million). Under the settlement, the company is also required to overhaul its emissions reporting system.