Volkswagen has shelled out billions of dollars over its diesel cheating scandal in the U.S. Now it’s in talks to settle claims by more than 400,000 disgruntled customers in Germany.
All this began more than four years ago when VW admitted it used illegal software to cheat on emission tests covering 10 million of its diesel-powered vehicles.
A Scary Precedent in the U.S.
VW got hammered by the scandal in the pro-consumer U.S. over about 550,000 such diesels. Eventually, the company paid more than $15 billion in fines, restitution, car buybacks and payments to customers over the lost resale value of their vehicles.
It’s that latter issue, depreciation, that has prompted thousands of VW customers in Germany to sue VW. They have banded together under a brand new law in Germany that enables U.S.-style class-action lawsuits on behalf of groups of people with similar complaints.
Most of those owners are being represented by VZBV (the Federation of German Consumer Organizations). VZBV represents 40 consumer groups in Germany. The talks have just begun, and there’s certainly no guarantee that a deal will emerge.
Apples and Oranges
VW has taken a tough stance in Europe over its rigged diesels. It has successfully deflected demands for U.S.-like payouts so far by pointing to a big difference in the two markets.
In Germany, Reuters notes, tainted diesels didn’t lose their road worthiness certification if owners agreed to let VW update their vehicles’ engine control software. That wasn’t an option for many customers in the U.S., whose vehicles suddenly became permanently damaged goods in the eye of the used-car market.
If VW does agree to compensate German customers, the awards aren’t likely to match those paid in the U.S. On the other hand, there are roughly three times as many potential recipients.
Germany isn’t the only place where VW faces the heat. The company sold 1.2 million of its tainted diesels in the U.K., and it faces a similar lawsuit on behalf of 94,000 customers there. Could the same scenario play out in dozens of other countries? Yes, it could.
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