In court - ‘Defeat’ devices in vehicles cost VW $4.3bn

9th February 2017

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German automotive company Volkswagen (VW) has been fined $2.8bn after agreeing to plead guilty to felonies involving the sale of approximately 590,000 diesel vehicles in the US that were fitted with a efeat device' to cheat federal emissions tests.

In separate civil resolutions of environmental, customs and financial claims, VW has agreed to pay $1.5bn. This includes a claim by the US Environmental Protection Agency (EPA) for civil penalties against the firm for importing and selling the vehicles, as well as US Customs and Border Protection agency claims for fraud.

‘Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection, and financial laws,' said Loretta Lynch, who was then attorney general. ‘In the days ahead, [the justice department] will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.’

VW Group, which includes Audi and Porsche as well as Volkswagen, admitted in September 2015 that it had used a software algorithm known as a ‘defeat device’ to artificially lower nitrous dioxide emissions from diesel vehicles during tests, contravening rules set by the Clean Air Act since 2009 and putting people’s health at risk.

As part of the settlement, VW must remove from the US or perform an approved emissions modification on at least 85% of affected 2.0 and 3.0 litre vehicles by specified deadlines, and abide by a separate 85% recall rate in California. If the firm fails to reach the 85% goal, it must pay additional penalties equal to $85m and $13.5m for each percentage point by which it falls short of the national and California recall targets respectively.

VW has also agreed to compensate some customers for alleged damages. Under the terms of the agreement, the company could spend up to $10.03bn reimbursing consumers in the US.

VW chief executive Matthias Müller said: ‘Volkswagen deeply regrets the behaviour that gave rise to the diesel crisis. We will continue to press forward with changes to our way of thinking and working.’

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