VW Scandal update – Compensation due?
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Date Published:08 Mar 2016 Last Updated:02 Aug 2021

VW Scandal update – Compensation due?

Banking & Finance Litigation

VW has announced that British Volkswagen owners who have been affected by the emissions scandal will not receive any compensation, but this does not mean that those affected are unable to take legal action against VW.

Ellis Jones continues to consider a number of possible remedial options to be taken on behalf of those who have been affected by the scandal.

What is the Scandal?

In September last year, Volkswagen announced that up to 11 million cars worldwide could be affected after they admitted to vehicles being fitted with illegal “defeat devices”. This meant that diesel vehicles were reported to produce up to 40 times more pollution than allowed, so effectively cheating essential emissions tests.

This however was not the full extent of the scandal and it later emerged that VW had also falsified figures of CO2 emissions. Unlike the defeat devices, this was not an issue which could simply be fixed by recalling the vehicles, rather VW had simply falsely declared CO2 emissions.

For a more in-depth explanation of both of the above issues, please see our latest articles:

Is compensation due?

Volkswagen’s UK Boss, Paul Willis, believes that rather than paying compensation to those affected, the money is better spent on recalling and fixing cars fitted with one of the so-called defeat devices. Mr Willis added that no loss has been incurred in the emissions scandal and it therefore follows that no compensation is due.

This is not consistent with the position taken in the US where consumers are being given ‘good-will’ payments of £330 ($500), plus another £330 ($500) of credit vouchers to encourage brand loyalty.

But Mr Willis said: “In the UK, rather than offering a separate financial payment as a goodwill gesture at this stage, we think that, with the fix just around the corner, the sums available for such a goodwill payment should be spent on maximising the uptake of the technical measures among customers, and ensuring it is done with as little inconveniences to them as possible.”

This also seems to contradict previous comments made in December last year, by the CEO Matthias Mueller at a press conference broadcasted globally: “We’re working on an effective package for all our customers. There will be an attractive package, let’s call it compensation, for the reduction in value of cars.”

VW’s change of tune seems to stem from the fact that the changes made, as a result of the recall, will have “negligible effect” on customer cars in terms of performance or fuel economy, with Mueller explaining that owners “won’t be able to feel it.”

However, this ‘no loss’ approach is debatable and legal experts argue that owner’s cars hit by the scandal have experienced a loss in resale value, with the brand falling in popularity among drivers as a result of the deception. Customers should therefore not be prevented from taking legal action against VW.

When will the recalls happen?

Whilst VW still appear unsure of exact time scales and methods for rectifying the faults, it seems the 2.0-litre diesels will receive a software tweak, while vehicles with a 1.6-litre diesel will need to be fitted with a ‘flow transformer’ device to help the engine’s computer calculate the right amount of fuel and air being combusted.

Volkswagen has published the following timeline for UK recalls:

Engine Approval by KBA Intended start of Fix roll out
EA 189 2.0-litre Jan/Feb 2016 1/3/2016
EA 189 1.2-litre April/May 2016 1/6/2016
EA 189 1.6-litre July/Aug/Sept 2016 1/10/2016

 

If you have been affected we may be able to help you on a no win no fee basis.

Future claims against the Volkswagen Group, in relation to ‘dieselgate’, may be possible because of consumer law breaches, misrepresentation and breach of contract.

Despite VW’s statement that no compensation is due as “no loss” was incurred, those customers who brought VW vehicles, specifically because of the low levels of CO2 emitted, may bring a claim against VW on the grounds of false advertising as motorists were led to believe the vehicles would have lower tax rates and fuel efficiency. This is also particularly problematic for VW as vehicle excise duty is calculated based on either engine size or fuel type and CO2 emissions.

The scandal has also affected the value of owner’s vehicles, those who are trying to sell their cars may bring a claim against VW because they may get a lower price as a result of the admissions.

Ellis Jones is currently collating a client base of individuals affected by this scandal, and are considering the most appropriate and cost effective way to seek compensation, which may result in group legal action against Volkswagen. In light of VW’s latest refusal to provide compensation, please contact our Group & Specialist Litigation Partner William Fox Bregman within the Dispute Resolution team on 01202 525333.