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VW agree compensation in the US but continue to deny fault in UK

Compensation agreed for some US Volkswagen owners. However, UK owners still left frustrated

27 June 2016

Lawyers acting on behalf of US VW owners have announced that Volkswagen AG has agreed to remove noncompliant diesel-powered vehicles from the road and compensate U.S. owners in a deal that is worth more than $15 billion.

The agreement of a compensation deal in the US was widely reported earlier in the year, and details of the deal have now been made available.

The sums to be paid by the company would be used to compensate 482,000 owners of 2.0 litre vehicles who will receive between $1,000 and $7,000, depending upon the age of their vehicle.

The settlement includes $10.033bn to offer buybacks to owners of about 475,000 polluting vehicles and nearly $5bn in funds to offset excess diesel emissions and boost zero emission vehicles.

It is understood that US owners would have a choice between selling their vehicles back to Volkswagen at the value before the scandal broke on 18 September 2015, or keeping the cars and letting the company repair them.

Either way, they would also get $1,000 to $7,000 depending on their car’s age, with an average payment of $5,000.

Whilst the bulk of the money would be used to fix the affected vehicles, buy them back and compensate owners, some of the funds would also go to US government agencies as penalties and be put towards an environmental programme to remediate the environmental damage caused by the pollution.

A separate settlement with nearly all US state attorneys general over excess diesel emissions is expected to be more than $500m and will push the total to over $15bn.

Previous owners will receive half of the sum paid to current owners, while people who leased cars will also get compensation.

Owners would also receive the same compensation if they choose to have the vehicles repaired, assuming US regulators approve a fix at a later date.

The settlement also includes $2.7bn in funds to offset excess diesel emissions and $2bn in VW investments in green energy and zero emission vehicle efforts.

The diesel offset fund could rise if VW has not fixed or bought back 85% of the vehicles by mid-2019.

Volkswagen continue to face claims relating to 3.0 litre engines together with the prospect of hefty fines from US agencies, including a separate investigation by the US justice department.

Meanwhile in the UK, Volkswagen continues to deny that the software fitted to affected vehicles was illegal or that VW owners have suffered any loss. They maintain their refusal to compensate owners.

On Wednesday Volkswagen announced that the German motor authority had approved fixes to be applied to a further 1 million vehicles.

The 1 million further vehicles are primarily Golf vehicles and means that fixes have now been approved for more than 3.7 million vehicles, including Volkswagen Passat, Tiguan and Caddy, other Golf variants, the Seat Exeo, the Skoda Superb and Audi models such as the A3, A4 and Q5.

German prosecutors have also confirmed that they have launched an investigation into the former Volkswagen chief executive, Martin Winterkorn, on suspicion of possible market manipulation related to the scandal.

This probe is said to centre on whether Mr Winterkorn should have informed investors much sooner that Volkswagen had been manipulating emissions from its cars.

Bozena Michalowska, a Partner in the Consumer Law and Product Safety group at Leigh Day said:

“Whilst the settlement of any claims arising from this scandal is a welcomed development, the current position for UK based vehicle owners is very different.

"Volkswagen are continuing to deny that the affected vehicles in the UK contain a defeat device and maintain that the vehicles were on the road lawfully; this is despite the fact that the German motor authority have determined that the software was illegal and have asked Volkswagen to repair the affected vehicles to remove the alleged defeat device. Volkswagen argue that it is premature to discuss compensation until the impact of the ‘fixes’ has been assessed.

“Volkswagen’s position in respect of UK vehicle owners causes further outrage to our clients who are disappointed that consumers in the US are receiving preferential treatment. Whilst we hope to be able to achieve a negotiated settlement, it looks increasingly likely that it will become necessary to issue court proceedings.”

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