Volkswagen refuses to make offer of compensation for European customers

Volkswagen refuses to make offer of compensation for European customers

Volkswagen has agreed to pay up to $15.3 billion as a settlement to resolve the emission scandal in the US. The settlement is considered to be the biggest one in the history of auto industry. German car maker has now made it clear that it would not carry out similar compensation for customers in Europe over the same issue.

Volkswagen’s CEO Matthias Müller has rejected the calls from the replacements from European customers. The company has agreed that it created a cheat software that were able to find out whetne the cars were being tested by the US Environmental Protection Agency (EPA) and turned on the pollution controls.

Last week, European Union’s Industry Commissioner Elzbieta Bienkowska has asked the German automaker that it should provide compensation to European owners. Bienkowska said that it would be a biased behavior from the company side if European customers are treated differently than US customers just because of the fact that they have a different legal system.

In a meeting with Bienkowska, Müller mentioned that owing to stringent US emissions standards, it became difficult for the company to fix the cars compliant than in Europe. This is the reason that it has to pay such a big amount in the US.

Bienkowska believes that Volkswagen should voluntarily provide European car owners with the compensation that should be comparable with that of US customers.

“In the U.S. the (emission) limits are stricter, which makes the fix more complicated. And taking part in the buyback is voluntary (for customers), which is not the case in Germany, for example”, mentioned Müller.

He further mentioned if the company has to replicate the US deal in Europe then it would become financial difficult for them. Volkswagen said that it has announced a recall in Europe in which it come up with a software update in some cars and retrofit hardware in the emissions systems in others.

Ferdinand Dudenhöffer, head of the Center for Automotive Research in Duisburg, mentioned that the rules in America and Europe are quite different. Michael Hausfeld, chairman of the law firm Hausfeld & Co. LLP, said that Volkswagen cannot ignore European consumers. And, the company needs to acknowledge that Europeans are as worthy of justice as their American counterparts.

On the other hand, Müller said that they need to be patient as such a level of transformation does not take place in a day. He said that they need to be successful in convincing their customers. Volkswagen’s brand chief Herbert Diess has made it clear that he would not step down from his position irrespective of the fact that he is being investigated by public prosecutors in the country.

In 2015, Volkswagen took the responsibility of €16.2 billion to cover the cost of fixing vehicles in Europe and providing the funding for settlement in the US. As per the deal settled in court, up to $10.03 billion will be given to the 475,000 affected vehicles with two-liter diesel engines.

The company would also pay $2.7 billion to an environmental remediation fund and $2 billion will used for the promotion of zero-emission vehicle technology. If similar compensation is announced for European car owners then it would add up to around €40 billion and that is the reason for which the company has refused doing the same for Europe.

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