Dieselgate lottery

Big bucks for VW drivers in US, not even a software update for Germans

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He's just sold his diesel stinker back to VW. Source: Reuters

If you’re a VW owner in America, you’ll have no problem getting compensated for the automaker’s emissions fraud, known as Dieselgate. You get a choice of a refund or an engine refit, combined with a compensation payment for your trouble. The process is smooth and speedy.

It’s a very different story in its home market Germany, where VW drivers are being forced to resort to lawsuits to get their money back. The automaker has refused expensive engine refits and has been painfully slow to provide even the promised software updates to cut toxic emissions.

Germany’s different legal system, which does not offer US-style class action lawsuits, has left German diesel owners empty-handed. The country’s Federal Motor Transport Authority only forced VW to update the engine software of 2.8 million manipulated diesel autos and remove the illegal code, which elevated toxic emissions on the road.

In the US on the other hand, VW paid out compensation to some 400,000 customers, according to the latest report by class action plaintiffs seen by Handelsblatt. That has so far cost the company some $7.4 billion. The report praised VW’s “effective and efficient” implementation of the refund program and said complaints over sluggish processing of claims were rare.

VW has set aside €25 billion to pay for the diesel emissions fraud. Most of that money will go to US customers and authorities.

The average refund amounts to $21,500 but VW has been paying as much as $45,000 for bigger models. And those drivers who agree to an engine refit rather than handing the car back still get compensation averaging some $6,000. The maximum sum is $10,000.

Most US drivers — 350,000 — have decided to get their money back while 50,000 have opted for an engine overhaul that is far more elaborate than the software updates being offered to customers in Germany.

The report said VW has so far taken some 82.5 percent of cars fitted with the fraudulent software off US streets or refitted the engines, which puts it close to the 85 percent target it agreed with the Department of Justice, environmental authorities and plaintiffs. If it doesn’t reach that level it will have to pay further fines, which it’s intent on avoiding.

VW has so far set aside €25 billion ($31 billion) to pay for the diesel emissions fraud that emerged in September 2015. Most of that money has gone towards paying fines and compensation to drivers in the US, where the total sum could hit $22 billion. VW has been spared major fines in Germany and Europe.

If VW were to agree to technical refits in Germany, which would require the installation of an exhaust cleaning system, it would cost it billions of euros. The carmaker would face a bill of €17 billion to repair 2.8 million cars in Germany, said Matthias Müller, VW’s boss, earlier this month. Depending on the vehicle, a refit would cost between €1,500 and €7,000 per car.

VW actually continues to insist that it didn’t break any laws in Germany. And while there is mounting political and public pressure on it and other automakers to reduce toxic emissions from the diesel cars they’ve sold, it’s proving to be a painfully slow process.

In an effort to prevent diesel bans in German cities, they have offered to update the engine’s software to reduce air pollution. But the carmakers have been slow to install even these relatively simple software updates. VW hasn’t updated all the 2.46 million vehicles fitted with the emissions-cheating software in Germany, according to unofficial data from the German transport ministry. Of the 2.84 million cars that the other manufacturers had voluntarily agreed to refit, less than half have been processed so far.

Whereas VW owners in the US can do away with their manipulated diesel cars and swiftly receive refunds, those in Germany are forced into lengthy legal battles to win compensation, if they are rewarded at all. German drivers may have no other choice but to keep using their stinkers and keep polluting the air.

Stefan Menzel writes about the auto industry focusing on Volkswagen. Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. To contact the authors: menzel@handelsblatt.com and delhaes@handelsblatt.com

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