VW settles US emissions case

Volkswagen (VW) has reached settlement with the US Justice Department to address excess diesel emissions in hundreds of thousands of polluting vehicles.

A federal judge in San Francisco said the deal is expected to include ‘substantial compensation’ to owners to sell back or have their vehicles fixed or to cancel outstanding leases. The agreement affects the owners of about 482,000 VWs.

The deal is expected to settle more than 600 class action civil suits filed in US courts and will also include an environmental remediation fund to address excess emissions.

Frost & Sullivan programme manager, Shwetha Surender’s said, ‘The Volkswagen Group reached a settlement with the US authorities in advance of its hearing. Senior US district judge Charles Breyer declared that a general path has been established. This will include a customer compensation plan with the US government. In total $1bn has been set aside; the specifics are yet to be disclosed as the pay-outs are likely to vary depending on the level of rework required, but a considerable amount of this is likely to go into VW buying cars back. Including this in the deal sends out the right signals to the consumers.

‘While this is a step in the right direction to mitigate the damages from the emission scandal, sales in the US have taken a hit, falling around 5.7% in the first quarter of the year. However, US sales as a whole account for only 10% of the Group’s sales. In contrast, China, Volkswagen’s largest market accounts for close to 40% of sales and Q1 2016 saw sales rise by 6.4% in the Chinese market. The wider outlook is more positive as global sales seem to have stabilised. The Q1 figures revealed a minor increase of around one per cent compared to the same period last year.’

Meanwhile, Japanese carmaker Mitsubishi Motors has admitted manipulating fuel economy tests on some of its own brand and Nissan cars to make the results more favourable. It involved 157,000 of its own brand light passenger cars and 468,000 vehicles produced for Nissan, which had no knowledge of the cheating.

Mitsubishi has immediately halted production and sales of the four cars, which are the Mitsubishi eK Wagon, Mitsubishi eK Space, the Nissan Dayz and Nissan Roox, which are manufactured for Nissan by Mitsubishi.

The cars in question are only sold in the Japanese domestic market.