Carmakers owe compensation for emissions cheating devices, German court rules

Reuters

Published Jun 26, 2023 07:04AM ET

Updated Jun 26, 2023 11:57AM ET

(Reuters) - Carmakers must pay compensation for diesel vehicles fitted with illegal emissions controlling devices, Germany's highest federal court ruled on Monday, in a case that could potentially cost Volkswagen (ETR:VOWG_p), Mercedes-Benz and others millions of euros.

Companies could owe owners between 5% and 15% of the purchase price of their vehicle, the court ruled, in a case against Volkswagen, its Audi brand and Mercedes-Benz that has implications for similar lawsuits.

The judge overturned previous dismissals by courts of such claims and referred them back to courts of appeal. It was up to carmakers to prove that their so-called defeat devices were functional and not illegal, she said.

Defeat devices are mechanisms or software that can change vehicle emissions levels, leading to numerous court disputes over whether manufacturers use them improperly to mask the true pollution levels of their vehicles.

Carmakers argue the devices, which are only switched on at certain temperatures, are needed to protect the motor and are in line with the law.

Asked about the ruling, Volkswagen said its defeat devices were not illegal and as such it was convinced courts would continue to reject any compensation claims.

Mercedes-Benz argued that European authorities considered such temperature windows to be permissible until July last year, and as such using them could not be seen as negligence.