No Cash for European VW Customers

Chairman of the Board of Management of Volkswagen AG at the EU Commission, Brussels, Belgium – 06 Feb 2017
Brussels is not as powerful as it thought. Picture source: EPA

Despite months of tough talk, the European Commission has failed to secure financial compensation from Volkswagen for European diesel owners affected by the emissions scandal.

Instead, the EU executive and the automaker have agreed that VW diesel owners will receive an extended two-year warranty on parts repaired to make vehicles with EA189 model engines compliant with emissions standards. Daily Die Welt first broke the story.

For well over a year, the European Commission has tried to pressure Volkswagen, the world’s largest automaker by sales, into paying financial compensation to European diesel owners whose vehicles have devices installed to cheat emissions tests.

Ms. Jourova said in the future Brussels needs stronger legal mechanisms to address mistreatment of European customers.

In 2016, European Industry Commissioner Elzbieta Bienkowska said European customers should receive the same compensation as customers in the United States.

Volkswagen agreed to a $10-billion settlement with the owners of nearly 500,000 two-liter diesel vehicles in the United States. The owners can opt for buyback or a repair and up to $10,000 in compensation. Altogether, VW is on the hook for $22 billion in the United States for cheating emissions tests.

“You cannot openly say, although the cheat was the same on both sides of the Atlantic, you are treating European consumers differently,” Ms. Bienkowska told the Financial Times back in January 2016. She vowed that Brussels “will never step back on this because it’s important.”

Even as late as March 2017, the European Commission sought to compel Volkswagen to pay compensation to European diesel owners. European Justice Commissioner Vera Jourova, in a statement to Handelsblatt at the time, threatened enforcement action against the automaker for violating EU consumer legislation and failing to meet consumer demands.

In the end, however, Brussels had few levers at its disposal to compel Volkswagen to offer customers financial compensation. Ms. Jourova, speaking to daily Die Welt, said in the future Brussels needs stronger legal mechanisms to address mistreatment of European customers.

Even the extended warranty comes with strings attached, according to Die Welt. The warranty is valid only for the first two years after the vehicle was in the shop and only for vehicles that have less than 250,000 kilometers. In addition, the warranty only applies to 11 parts.

Volkswagen has refused to offer financial compensation in Europe comparable to the US settlement, arguing that the laws on each side of the Atlantic are different.

Consumer groups, however, continue to press ahead with efforts to force Volkswagen to pay financial damages. On Tuesday, the Dutch organization Volkswagen Car Claim Foundation announced it would launch a lawsuit on behalf of 180,000 Dutch VW diesel owners. VW has condemned such suits in Europe as noting more than a “business model” for law firms.

Spencer Kimball is an editor with Handelsblatt Global. To contact the author: s.kimball@extern.handelsblatt.com

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