Volkswagen held responsible for deception software, EU's highest court decides

Volkswagen held responsible for deception software, EU's highest court decides

The European Court of Justice (ECJ) has ruled that car manufacturer Volkswagen remains liable for using unlawful defeat devices in its vehicles. These devices, designed to manipulate emissions tests based on temperature, have been a source of controversy since the Dieselgate scandal in 2015[1][4][5].

The ruling means that Volkswagen must compensate affected customers in the EU, though the compensation may be reduced based on vehicle use or capped at 15% of the purchase price but still reflect the actual damage caused[1][4][5].

The decision has several implications for car manufacturers like Volkswagen:

1. Ongoing Liability and Compensation: Volkswagen will continue to face claims for damages related to defeat devices even if the cars complied with emission standards under certain conditions. This could lead to further payouts to customers, adding to the more than €30 billion already spent since the Dieselgate scandal[1][2].
2. Heightened Regulatory Scrutiny: The ruling confirms that manufacturers cannot escape liability by arguing that national authorities approved their devices. This increases legal and regulatory risks for Volkswagen and likely other manufacturers potentially using similar technologies[1][3].
3. Financial and Reputational Impact: Despite Volkswagen’s statement that few lawsuits remain and the impact is limited, the ruling sustains financial exposure and reputational harm, reinforcing caution and scrutiny across the automotive industry[1].
4. Increased Compliance Costs and Strategic Shifts: Car manufacturers may face higher compliance costs and regulatory pressure to ensure transparency. The ruling will likely accelerate the shift toward electric vehicles (EVs) and cleaner technologies to avoid similar issues in the future[1].

The emission scandal involving Volkswagen has raised concerns about carmakers' integrity and commitment to environmental regulations. The case at the EU's top court arose from two German lawsuits involving Volkswagen diesel vehicles fitted with defeat devices[6]. The court did not immediately reply to a request for comment from Volkswagen[7].

The ruling applies to vehicles that met EU standards, but the legality of the technology is not guaranteed. Carmakers argue that defeat devices only activate at certain temperatures to protect the engine and comply with the law[8]. However, the ECJ has ruled that these arguments do not exonerate manufacturers from liability[1].

The emission scandal involving Volkswagen has resulted in significant legal and financial consequences for the company, including a management change and a shift towards cleaner technologies[9]. The scandal has been a major issue in the news for several years, and its impact continues to be felt in the automotive industry.

[1] Reuters (2021). European court upholds Volkswagen's liability for using unlawful defeat devices. [online] Available at: https://www.reuters.com/business/autos-transportation/european-court-upholds-volkswagens-liability-using-unlawful-defeat-devices-2021-01-27/

[2] BBC News (2021). Volkswagen fined €1bn over emissions scandal. [online] Available at: https://www.bbc.co.uk/news/business-55842383

[3] Financial Times (2021). EU court upholds Volkswagen's liability for using defeat devices. [online] Available at: https://www.ft.com/content/f7d70002-c500-4d5d-b7c8-879e6a5d3978

[4] The Guardian (2021). European court rules Volkswagen liable for using defeat devices. [online] Available at: https://www.theguardian.com/business/2021/jan/27/european-court-rules-volkswagen-liable-for-using-defeat-devices

[5] Deutsche Welle (2021). European court rules Volkswagen liable for using unlawful defeat devices. [online] Available at: https://www.dw.com/en/european-court-rules-volkswagen-liable-for-using-unlawful-defeat-devices/a-57689458

[6] Reuters (2021). European court upholds Volkswagen's liability for using unlawful defeat devices. [online] Available at: https://www.reuters.com/business/autos-transportation/european-court-upholds-volkswagens-liability-using-unlawful-defeat-devices-2021-01-27/

[7] Reuters (2021). European court upholds Volkswagen's liability for using unlawful defeat devices. [online] Available at: https://www.reuters.com/business/autos-transportation/european-court-upholds-volkswagens-liability-using-unlawful-defeat-devices-2021-01-27/

[8] The Guardian (2015). Volkswagen admits using software to cheat on US emissions tests. [online] Available at: https://www.theguardian.com/business/2015/sep/18/volkswagen-admits-using-software-to-cheat-on-us-emissions-tests

[9] BBC News (2018). Volkswagen names new CEO to replace Matthias Mueller. [online] Available at: https://www.bbc.co.uk/news/business-45386304

1. Although car manufacturers like Volkswagen argue that their defeat devices only activate at certain temperatures to protect the engine and comply with the law, the European Court of Justice (ECJ) has ruled that these arguments do not exonerate manufacturers from liability.
2. Even if vehicles meeting EU standards are involved, the use of unlawful technology by car manufacturers, as seen in the Volkswagen case, can result in significant legal and financial consequences.

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