Volkswagen under pressure from European Commission over compensation in wake of diesel scandal

 
James Nickerson
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Volkswagen Senior Directors Meet For Crisis Talks As Emissions Scandal Widens
An EU Commission spokesperson said consumers in the EU have been cheated (Source: Getty)

The European Commission is putting pressure on Volkswagen (VW) after it refused to compensate car owners in Europe while at the same time paying compensation in America.

The commission is voicing its frustration at the carmaking giant after it offered up to $10,000 each to owners in the US, while offering nothing to European counterparts.

The moves come as the emissions scandal lingers on after VW last year admitted to rigging vehicles with a device that cheated emissions tests, causing the company to set aside billions, recall millions of cars and eventually resulted in German prosecutors launching a probe into the company's former chief executive.

Read more: Volkswagen agrees to shell out $14.7bn to settle emissions-cheating scandal

In April current chief executive Matthias Muller wrote to Elżbieta Bieńkowska, European commissioner for industry, stating that in Europe the issue could be dealt with by fixing the vehicles, with no financial compensation.

“As the vehicles in the EU will be technically flawless after successful retrofitting and will comply with all regulatory standards, no basis for further compensation exists,” wrote Müller, which was obtained by the Financial Times through a freedom of information request.

Officials had said that the refusal to make even a gesture could damage the reputation of the wider car industry.

A European Commission spokesperson told City A.M.: "Commissioner Bieńkowska has been vocal on the matter of compensating drivers in Europe the same way as in the US on many occasions. She has repeatedly invited the group to reflect on adequate ways to compensate consumers, most recently at a meeting with the CEO on 30 June. The response has not been encouraging.

"Consumers in the EU have been cheated in the same way as in the US, and so hiding behind legal arguments is not the best way to proceed. As this is about voluntary compensation, this is a decision for Volkswagen to take, not for the commission."

Read more: Volkswagen's former chief executive Martin Winterkorn is under investigation

The news comes after VW agreed to pay up to $15.3bn in fines and environmental incentives in the US after the scandal. Car owners will get at least $5,100.

A spokesperson for the European Commission said that that figure may not need to be matched exactly, but that some form of compensation should be made.

However, the commission does not have the power to investigate and penalise VW, which lies with national jurisdictions.

It was also reported this week that VW will get away without fines from the German government, reflecting a softer political impact on the firm in Europe.

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