Floodgates could open after Spanish court orders VW customer compensation

October 28, 2016

A Spanish court has ordered Volkswagen (VW) to pay €5,000 to a buyer of an Audi Q5 fitted with emissions-cheating software, in a ruling that could open the floodgates to a wave of new consumer lawsuits.

The court ruling stated the reason for the compensation was that the car had been fitted with software that made the car’s emissions appear cleaner than the reality under testing.  

This marks the first time a Spanish judge has ruled in favour of the consumer of a Volkswagen Group car altered with emissions-cheating software.  

The order for compensation was made to two Volkswagen group subsidiaries. Volkswagen-Audi España said the carmaker would appeal the ruling.  

Volkswagen admitted in September 2015 to installing secret software in 11 million diesel cars worldwide to cheat emissions tests. On Tuesday, a US judge approved a $14.7 billion (€13.5 billion) settlement between Volkswagen and US regulators. Pressure has been mounting for EU customers also to be compensated, and the Spanish judge’s ruling marks a crucial precedent which could open the floodgates to fair compensation for EU customers.  

The Spanish court in Valladolid, northwestern Spain’s biggest city imposed a fine on Volkswagen España and Valladolid Wagen equivalent to 10% of the car’s value.  

The US suit awarded compensation equivalent to the total value of the US owners’ car. Imposing a a US-style compensation scheme for Europe would be ‘overwhelming, Volkswagen claims. There are far more Volkswagen cars (eight million) sold in Europe with the emissions-cheating devices, than in the US. So far, European customers have only got a software update and a short piece of plastic tubing, while US customers will get about $20,000 (€18,000) in total per car.  

The judge said the owner of the Audi Q5, bought in 2013, wanted compensation and a new car after discovering in the wake of the Volkswagen emissions scandal that the car has software which allowed it to cheat emissions tests.  

Consumer groups are lining up to take advantage of the ruling to give consumers compensation for Volkswagen’s deception and the resulting loss in the value of their cars. Spanish consumer organisation OCU has called on owners with affected cars in Spain to join more than 5,500 others in filing a class-action lawsuit against Volkswagen.  

Spain's high court said in October last year it had begun an investigation into Volkswagen cars in Spain. The news comes as Audi, which is Volkswagen Group’s biggest profit driver, cut its earnings outlook as the Volkswagen group emissions scandal costs rise, and as Volkswagen group desperately tries to rebrand following the scandal. Audi has quit Le Mans after almost two decades to instead focus on electric cars, competing in the all-electric Formula E. However, consumers and lawyers are unlikely to back down, with Volkswagen on target to overtake Toyota in sales to become the world’s biggest carmaker.

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