With one of its Australian class action lawsuits back before the Federal Court in coming weeks, sceptics say Volkswagen’s announcement that it will launch a fleet of electric cars is just a PR stunt.
And with law suits still underway in the US, the company has a long way to go before the global emissions scandal is fully resolved.
Nevertheless, Volkswagen has just announced it will spend $15 billion by 2025 producing e-cars as part of its strategy to become the ‘leader in the green car industry.’
While motoring enthusiasts say the company’s move reflects a broader shift in the automotive industry, the announcement to go green is a timely distraction from the emissions trading scandal which has seen the company facing long-term damage to its reputation, and potentially billions in fines and damages worldwide.
Scandal rocked the globe
Last September, Volkswagen admitted installing sophisticated emissions-cheating software into diesel engines since 2009 to pass emissions tests and enable its cars to produce more pollution than permitted.
It was revealed that about 11 million cars are affected, and the scandal has gone viral – sending the company’s shares plummeting and forcing the CEO to resign.
As the news spread, France called for a Europe-wide probe into the company, South Korea summoned VW officials and the US Justice Department vowed to make the company pay, which could include fines of up to $18 US billion.
In the US
In the wake of the scandal, the company tried to appease angry consumers with presents, giving 20,000 owners $500 gift cards and $500 each to help pay for vehicle repairs, while assuring them that acceptance did not act as a barr against lawsuits.
American owners are currently awaiting the final details of an enormous settlement deal. It is understood that VW came to a tentative agreement with the US Justice Department earlier this year requiring the company to buy back almost half a million cars.
Under the deal, owners will receive a cash payment on top of the estimated value of their vehicle before the scandal became public last year.
A final settlement is expected to also include an environmental remediation fund to address the pollution caused by the vehicles to date, although it is not clear whether the deal will resolve the US Justice Department’s civil suit which was filed in January, or whether it will agree to pay a civil penalty.
Details of the settlement were due to be finalised last week, but a judge has extended the deadline.
Closer to Home
About 100,000 cars are affected in Australia, and two class action lawsuits are underway in the Federal Court.
Lawyers representing one of the lawsuits believe VW has no defence, but it is unclear whether the company will cut a deal similar to the US.
Many Australian owners want full compensation based on the fact that they purchased something different to what was advertised. They are understandably unhappy that their cars are damaging the environment, and have lost almost all of their resale value.
The Australian lawsuits could cost the local company more than $100 million.
Australian Consumer and Competition Commission
The ACCC has also been investigating whether Volkswagen breached Australian law by engaging in misleading or deceptive conduct through advertising and marketing its vehicles as having low emissions.
It is also investigating the advertising claims of other manufacturers, including Audi and Skoda.
If guilty, the companies could face fines of up to $1 million for each breach.