Volkswagen has succeeded in getting more than 85 percent of vehicles implicated in the Dieselgate scandal off US roads. At the end of December, the independent regulators supervising the case in the US announced that the German carmaker had managed to either retrofit or buy back most of the affected 3-liter diesel vehicles.
About 60,000 of the 100,000 3-liter diesel vehicle owners in the US decided to have their cars retrofitted with emissions filters and other hardware. The drivers who upgraded also received payouts of an average of $10,000 each. The others decided to sell their cars back to VW, receiving about $40,000 on average.
The compensation to US owners of VW Touareg, Porsche Cayenne, Audi A7 and Audi Q5 and other models was the outcome of a class-action lawsuit and a deal with the Justice Department. VW expects to spend about $2 billion to comply with the conditions. Had VW not managed to get at least 85 percent of the cars taken care of, the company would have had to pay a further $85 million to US authorities for every percentage point below the target.
€27.2 billion and counting
The 3-liter diesels were not even VW’s biggest problem in the US. There were about a half million 2-liter diesel models on American roads. The company managed to fulfill US authorities’ requirements on these by the middle of last year, buying back more than half of them. This operation will end up costing VW about $10 billion.
Volkswagen admitted in 2015 it had deceived regulators and customers by manipulating its engine software. Around 11 million diesel vehicles worldwide appeared to run clean during emissions tests, but on the road the cars spewed out more toxic gases than the law allowed. VW has so far set aside €27.2 billion ($31.2 billion) to pay for settlements, fines and repairs.
The Dieselgate bill will likely keep growing. Prosecutors in Stuttgart are still investigating Porsche Holding, the family vehicle controlling VW Group, as well as the carmaker itself for possibly violating shareholder disclosure laws. Investors also want €9 billion to compensate for the stock slump after the scandal was revealed in 2015 and have sued the holding and VW. Consumer groups have also sued VW.
Take a deep, diesel-free breath
In Germany and in the rest of Europe, VW owners are still waiting for their day in court — or at the very least, a little compensation. Unlike in the US, German and European authorities have said they will be satisfied with just software updates. The absence of class-action suits in the legal system forces European car owners to go through lengthy court proceedings to win compensation.
But about 400,000 VW owners have registered to join a Musterfeststellungsklage — in English, a model declaratory proceeding, or MDP. It's like a class-action suit but much more limited in scope. Previously in Germany, only shareholders could band together to sue a company in which they held stocks.
The new MDP rules were introduced by the German government in November last year, and the European Commission is now also considering collective damages. In Germany, the new MDP rules allow consumers to sue, but they must be represented by consumer rights organizations. In the VW case, the German consumer organization VZBV and automobile association ADAC are assisting.
The MDP case will only determine whether or not VW must compensate vehicle owners. If so, each individual customer must prove how much value their vehicle lost as a result of Dieselgate. Car owners will need patience: The issue is likely to take years to resolve.
Unsurprisingly, a spokesperson from VW cast doubt on whether class action cases would ever bring about a happy ending for angry VW owners. “Even now the majority of cases brought by Volkswagen customers have been unsuccessful in state courts,” the spokesperson said. “There are 18 judgments from higher regional courts, to do with Volkswagen or more specifically, to do with sellers, where the cases have failed.”
Stefan Menzel writes about the auto industry for Handelsblatt, focusing on Volkswagen. To contact the author: [email protected]