VW to compensate Canadian diesel owners

Dana Flavelle
The Toronto Star

Canadian owners of Volkswagen cars equipped with diesel engines that cheat emissions tests will be compensated under a deal struck in the U.S., Volkswagen Canada says.

Details will be announced in June, the company said in a statement released after Volkswagen agreed in a U.S. court Thursday to either buy back or fix the vehicles.

The value of the deal, earlier rumoured to be worth about $5,000 per vehicle, was not disclosed.

In San Francisco, Senior U.S. District Judge Charles Breyer said the deal between Volkswagen, the U.S. government and private lawyers would include “substantial compensation.”

The agreement reached with the U.S. Environmental Protection Agency will apply to Canadian owners because the EPA also certifies Canadian vehicles, VW Canada said in the statement.

About 600,000 of the vehicles were bought in the U.S., the judge said. In Canada, an estimated 100,000 VW’s are equipped with the so-called “clean diesel” engines.

The technology, intended to meet regulators’ clean air criteria without sacrificing vehicle performance and fuel efficiency, was a centrepiece of VW’s North American strategy.

Affected models include Jettas, Beetles, Golfs and Passats as far back as 2009, and also some Audis.

The company admitted in September 2015 that the vehicles had been deliberately programmed to activate emission controls only during pollution tests. Under normal driving conditions, the controls come off.

“Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the public,” Volkswagen Canada said in a statement.

“These agreements in principle are an important step on the road to making things right. As noted today in court, customers do not need to take any action at this time.

“Resolutions reached with the EPA apply to Canada as well because our Canadian vehicles are certified by the EPA,” the statement said. “Details are presently being worked on and we expect them to be made public in June.”

Canadian lawyer Tony Merchant, who is representing VW owners in a lawsuit against the automaker, said even $5,000 would be too little to make up for the lost value and higher cost of operating the compromised vehicles.

The agreement will include a fund for corrective efforts over the excess pollution, and Volkswagen will be required to commit other money to promote green automotive technology, said Breyer, who has not formally signed off on the deal yet.

The judge did not reveal whether it included details on how the company planned to repair the vehicles. Owners are worried any fix will make the cars more sluggish.

Vehicle owners and the U.S. Department of Justice sued the company after it acknowledged in September that it intentionally defeated emissions tests and put dirty vehicles on the road.

Any U.S. settlement could also influence what happens in Europe and in other countries, analysts said.

Shares in Volkswagen, which lost a quarter of their value after the company made the admission, rose 5.6 per cent on news of the deal.

Volkswagen told its shareholders last year it had set aside $7.3 billion to help defray the potential costs of a recall or regulatory penalties. Most outside observers have said that figure is likely far too low.

The company faces as much as $20 billion in fines for Clean Air Act violations alone, before paying to fix the cars or compensate their owners.

The court hearing Thursday also was expected to touch on a request to add the Federal Trade Commission to the case. The FTC has sued Volkswagen alleging deceptive advertising.

The owners’ lawyers also are seeking documents that Volkswagen provided to the law firm Jones Day, which the company has hired to investigate how the cheating happened.

The judge had threatened a trial this summer if the company did not meet his Thursday deadline to detail the timing of the repairs.

- with files from Toronto Star wire services