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VW Australia settles in diesel class action

Almost over: VGA has agreed to a settlement that will see it hand back between $87m and $127m to Australian customers.

Multimillion-dollar settlement over diesel emissions struck between VW, local owners

16 Sep 2019

VOLKSWAGEN Group Australia (VGA) has reached an in-principle settlement in the class action lawsuit over diesel emissions taken against it by owners of Volkswagen vehicles fitted with the EA189 diesel engine, agreeing to a minimum payout of $87 million.


Depending on the size of the claimant group, the payout could rise to as high as $127 million, while VGA will also pay the plaintiffs’ legal costs once they have been determined by the Federal Court.


The class action lawsuit has been in progress since 2015, when it was revealed that approximately 100,000 Volkswagen, Skoda and Audi vehicles in Australia with the EA189 diesel engine had been fitted with defeat devices that allowed them to pass emissions tests in a laboratory.


Assuming all owners of the affected vehicles participate in the remuneration, each owner can expect a payment of approximately $1400 per vehicle.


When the class action was first announced in November 2015, Sydney firm Bannister Law was initially hoping affected owners would receive a full refund of their vehicle’s purchase price, which based on an average price of $40,000, would have cost VGA about $4 billion.


The settlement announced this week encompasses five separate class action lawsuits covering all affected vehicles in Australia, and still needs to be confirmed by the Federal Court before officially closing.


VGA anticipates a conclusion to the proceedings in 2020, before which no payments can be made to owners.


Despite agreeing to the settlement, no admission of liability has been made by the defendants.


Lead plaintiff for Volkswagen Alister Dalton said the settlement was important for closure on both sides.


“It’s pleasing there will finally be some closure and a resolution for thousands of Australians, and it’s important that it forces some recognition from VW that there was a serious issue they had to face up to and deal with here in Australia regarding their vehicles,” he said.


Representing the class action plaintiffs, Maurice Blackburn principal lawyer Julian Schimmel said the result was a win for motorists who have spent recent years trying to seek compensation from the car-maker.


“This is an important step in providing a measure of justice and redress to the thousands of Australian motorists who claim they were financially impacted by the diesel emissions issue,” he said.


Affected vehicles included the Volkswagen Polo, Golf, Tiguan, Transporter, and Amarok, Audi A3 and A4, and Skoda Octavia, among others.


Audi is handled by a separate operation to VGA, with the latter responsible for Volkswagen and Skoda.


The settlement is the latest in a long line of payment being made by Volkswagen over the ‘Dieselgate’ scandal, which include $US34.3 ($A49.9b) of criminal and civil penalties handed down by the US Department of Justice in 2017, and €1 billion ($A1.61b) in its home country of Germany, thought to be one of the largest financial penalties handed down by German authorities against a company.


Meanwhile, discussions are in place between VGA and the Australian Competition and Consumer Commission (ACCC) to reach an in-principle settlement over the civil suit filed by the consumer watchdog.


First confirmed in September 2016, the ACCC suit accused the car-maker of misleading or deceptive conduct, which if found to be true could see Volkswagen in breach of Australian consumer law.


The ACCC was seeking “declarations, pecuniary penalties, corrective advertising, findings of fact and costs”, according to chairman Rod Sims at the time.


Volkswagen has said the settlement is close to finalisation, with a resolution expected to be reached shortly.

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