VW emissions crisis and legal consequences
The car industry has been rocked by the admission that the biggest car maker in the world, Volkswagen, have cheated emissions tests in the US. The Environmental Protection Agency in the USA found that some cars on sale in America had devices in diesels engines which could detect when they were being tested, and accordingly improve performance. The effect is that the engines emitted nitrogen oxide pollutants up to 40 times over the US limit. Along with the potential for criminal investigations, from both within the US and Germany, UK, Italy, France, South Korea, Canada and Germany have all launched investigations. Switzerland has gone so far as to ban sale of some models of VW.
VW, who are also responsible for the engines in Audi, Seat and Skoda brands, the company is facing $18 billion in potential fines with 11 million vehicles potentially affected worldwide. They have set aside €6.5 billion to deal with the costs involved with recalling the affected vehicles. These figures, however, exclude potential costs of consumer litigation. There have been suggestions from the German transport minister that VW have admitted to using the same fake emissions test in Europe as in US. If that is true, the value of the cars originally bought on the strength of their strong emission performance statistics, may decrease. Jim Holder, editorial director at Haymarket Automotive which publishes WhatCar and AutoCar, told the BBC: “In the short-term there will be an impact on the value of these cars and their desirability. That is because we do not know where the other 10.5 million cars with these cheat devices are, which has led to an obvious concern there will be some in Europe.” If so, there may be claim for compensation based on the misinformation at the point of sale. Jacqueline Young, head of group litigation at law firm Slater and Gordon, commented that “If UK cars are found to contain defeat devices, this would give rise to a claim by car owners and car dealerships who bought VW vehicles on the basis of false information and whose asset has now devalued.” However, as previous recalls, such as the Toyota/Lexus issues, did not create obvious impacts on used car’s values, such claims may be unnecessary. Clearly it is too early to tell the true extent but global litigation teams are certainly readying themselves for high profile international strings of litigation.