Volkswagen Canada strikes $2.1-billion deal with drivers in emissions scandal

Volkswagen Canada strikes $2.1-billion deal with drivers in emissions scandal

Canadian owners of affected Volkswagen AG vehicles caught up in the auto maker’s diesel scandal will share up to $2.1-billion in a class-action settlement.

Some details of the settlement were revealed Monday at an Ontario court hearing. The deal requires final approval by courts in Ontario and Quebec, lawyers for the plaintiffs said.

The deal allows owners to sell their vehicles back to Volkswagen Canada Inc., trade them in for new vehicles or have them repaired.

Payments will range from $5,100 to $8,000 for the 104,000 Canadian owners who are affected.

Judge Edward Belobaba called the settlement a “slam-dunk” class action.

The settlement still requires approval by courts, lawyers for the plaintiffs in the suit told a court hearing.

The settlement comes almost 15 months after Volkswagen AG admitted that it had installed in many of its vehicle lines so-called defeat devices that enabled diesel engines to pass regulatory tests, but disabled the devices during regular use.

The scandal has cost the German auto maker about $10-billion (U.S.) so far, damaged its reputation among consumers and sent sales skidding.

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The Canadian settlement also comes about six months after the company reached a deal with U.S. regulators that includes giving owners of affected vehicles the option of having Volkswagen buy them back.

Canadian owners of affected Volkswagen vehicles, which also include cars and crossovers produced by the auto maker’s luxury Audi and Porsche brands, have been clamouring for the federal government to take action – especially after Volkswagen Canada said in April that actions taken by its U.S. counterpart would be mirrored in Canada.

Auto makers that sell vehicles in Canada are regulated by the federal government; in this case the Ministry of the Environment and Climate Change.

Court filings in the class-action suit said Canadian “plaintiffs paid a premium of several thousand dollars for diesel-powered vehicles compared with gasoline-powered vehicles.”

The suit said the resale value of their vehicles plunged and they faced the disruption of getting them repaired. Volkswagen Canada failed to comply with the Canadian Environmental Protection Act, the lawsuit added.

About 107,000 Volkswagen vehicles with diesel engines in them and equipped with the defeat device were on the road in Canada in September, 2015, when the company acknowleded to U.S. regulators that it had installed the defeat devices in its vehicles.

Volkswagen Canada halted sales of diesel models that same month. Diesel sales represented about 20 per cent of Volkswagen Canada’s overall sales when they stopped selling models equipped with such engines.

Among the vehicles affected were 2009-2015 Jetta models; Audi A3 models from the 2010-2013 and 2015 model years and 2013-2016 Porsche Cayenne luxury crossovers.

Volkswagen Canada sales fell 13 per cent through the first 11 months of 2016 from year-earlier levels, compared with overall Canadian sales, which rose 3 per cent in the same period.