VW Canada, diesel owners agree to $2.1B settlement
Automaker also pays $15M penalty for its emissions-rigging scandal
Volkswagen Group Canada has reached a $2.1-billion settlement with 105,000 Canadian diesel owners, part of the ongoing fallout from its emissions-rigging scandal.
The proposed settlement, which still needs to be approved by the courts, will provide cash payments to owners of 2.0-litre Volkswagen and Audi diesel vehicles. Many owners will also have the choice of vehicle buybacks, trade-ins, early lease termination or emissions modification, although regulators must still approve the latter option. The total value of the benefits is up to $2.1 billion, one of the largest consumer settlements in Canadian history, according to the Competition Bureau.
Volkswagen will also pay a $15-million penalty to the Competition Bureau for misleading consumers by claiming its diesel engines were cleaner than equivalent gasoline engines.
“Our clients were clearly looking for finality and choices, and we hope that through this agreement we have provided both,” said Charles Wright, one of the lead counsels in the national classaction suit.
The Canadian agreement, announced Monday, closely mirrors a US$14.7-billion settlement in the U.S., which was approved by a judge in October.
“Volkswagen’s primary goal has always been to ensure our Canadian customers are treated fairly, and we believe that this proposed resolution achieves this aim,” Volkswagen Canada CEO Maria Sten-stroem said in a statement. “We are working hard to earn back the trust of our customers, dealers and regulators, and today is an important step in that effort. We appreciate the engagement of the other parties to these agreements and thank our Canadian customers for their continued patience.”
If an owner opts to sell a vehicle back to Volkswagen, the price will be determined based on the vehicle’s Canadian Black Book wholesale value as of Sept. 18, 2015, the day the emissions accusations became public.
Court approval hearings are expected to take place in March, after which owners can submit claims.
Volkswagen Canada said last month that it will not offer any diesel-powered vehicles for sale for the 2017 model year as it continues to deal with fallout from the emissions-rigging scandal.
Diesel sales in both Canada and the U.S. have been suspended since September 2015, when revelations came to light that the company installed “defeat devices” that turned on pollution-control systems only when a car was undergoing emissions tests.
The scandal has taken a toll on Volkswagen’s sales in Canada, which are down 13 per cent through November. Audi sales, on the other hand, appear to have escaped the fallout and are up 15.1 per cent year-to-date.
Volkswagen has said it will shift its focus to electric vehicles and SUVs in an attempt to improve its image and revitalize sales. Its goal is to sell at least one million electric vehicles by 2025, when it also aims to hit a pre-tax profit margin of six per cent and generate one billion euros of additional revenue from in-car digital services.
The German company said recently that it will cut 30,000 jobs worldwide, a move that will lead to 3.7 billion euros in annual savings by 2020.
Our clients were clearly looking for finality and choices, and we hope that through this agreement we have provided both.