Volkswagen Settles Emissions Scandal in Canada for $1.6 Billion

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By Peter Menyasz

Volkswagen Group Canada Inc. agreed to a C$2.1 billion ($1.6 billion) settlement to resolve a class action lawsuit over Canada’s emissions software scandal, one of the largest consumer settlements in the country’s history.

If approved by the courts, the class action settlement would provide restitution to the owners of about 105,000 vehicles with 2.0-liter diesel engines for which the automaker made false or misleading fuel consumption claims, the company said Dec. 19.

“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,” VW Canada President and Chief Executive Officer Maria Stenstrom said in a statement.

The settlement, which is subject to approval in March 2017 by the Ontario Superior Court of Justice and the Superior Court of Quebec, would offer affected consumers several choices: cash compensation; vehicle buyback; termination of a car lease without penalty; vehicle modification at no charge (if an emissions modification is approved by Canadian regulators); or “fair market value” of vehicle applied in trade-in to buy another Volkswagen or Audi.

Under that last scenario, the company would pay any difference between the vehicle’s wholesale value as of Sept. 18, 2015, and its fair market value at the time of trade-in.

The settlement amounts do not include legal costs that courts could impose on Volkswagen.

VW, Audi Agree to Additional Penalty

In a separate action, Canada’s Competition Bureau confirmed Dec. 19 that Volkswagen Group Canada and Audi Canada Inc. agreed to pay C$15 million ($11 million) to resolve claims that the companies used false or misleading environmental marketing for vehicles with the 2.0-liter diesel engines.

The consent order, registered with the Competition Tribunal, does not resolve ongoing investigation of the companies’ claims for vehicles equipped with 3.0-liter diesel engines, it said. Proposed class actions on those vehicles are still underway.

“Consumers expect and deserve truth in advertising, particularly when it relates to such a significant investment,” Competition Commissioner John Pecman said in a statement. “We are pleased that Canadians will now begin to receive compensation and that Volkswagen Canada and Audi Canada will address the impact this matter has had on the marketplace.”

The Competition Bureau said its investigation found that the auto companies misled consumers by promoting vehicles sold or leased in Canada as having diesel engines with lower emissions than equivalent gasoline engines.

The vehicles passed required emissions tests because software was installed that altered their operation during testing to create the appearance of lower emissions, it said.

To contact the reporter on this story: Peter Menyasz in Ottawa at correspondents@bna.com

To contact the editor: Greg Henderson at ghenderson@bna.com

For More Information

Details of the Volkswagen/Audi settlement in Canada are available at http://bit.ly/2hSGNyl.

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