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Conceptual image on Volkswagen recent emissions test fraud scandal

VW must compensate customers over emissions cheating, German court rules

Image credit: Rui Matos | Dreamstime

A court has ruled that Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, dealing a fresh blow to the automaker almost five years after the emissions scandal emerged.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Back in September 2015, Volkswagen admitted to cheating missions tests on diesel engines, a scandal which has already cost it more than €30bn (£26.7bn) in regulatory fines and vehicle refits, predominantly in the US.

US authorities banned the affected cars after the software used to cheat emissions tests was discovered, triggering claims for compensation. Its vehicles remained on European roads, however, leading Volkswagen arguing that compensation claims were without merit. Instead, European authorities forced the firm to update its engine control software and served fines for fraud and administrative lapses.

Following the new ruling, Volkswagen said it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment. It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost.

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already benefitted from.

At the time, the court said that the customer should be awarded €25,600 (£23,000) for the used-car purchase he made for €31,500 (£28,000) in 2014. “We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

Meanwhile, a Volkswagen spokesman said that outside of Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The firm also said it had paid out a total of €750m (£670m) to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class-action lawsuit brought by a German consumer group. Last month, the carmaker said it would set aside a total of €830m (£740m) for that deal.

In a separate court, Volkswagen agreed last week to pay €9m (£8m) to end proceedings against its chairman and chief executive, who were both accused of withholding market-moving information before the emissions scandal came to light.

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