Photographer: Akos Stiller/Bloomberg

VW Balks at Compensation as EU Caves in Showdown Meeting

  • EU consumer chief comments after meeting VW’s Garcia Sanz
  • EU backs down from demands that VW offer more compensation

Volkswagen AG offered no hint of concessions after a meeting with European Union regulators over demands the company provide compensation to the bloc’s consumers hit by the diesel emissions scandal.

VW will carry out an “EU-wide action plan” to inform customers and repair the vehicles, EU Justice and Consumer Affairs Commissioner Vera Jourova said after meeting with Francisco Javier Garcia Sanz, VW’s top negotiator for diesel issues, in Brussels Wednesday.

There has been anger about the wide disparity between the packages offered to American car owners compared to their European counterparts. Americans are getting packages worth thousands of dollars but those in the EU were simply offered repairs.

Consumer groups were quick to criticize the outcome of the meeting, saying that the action plan is little more than VW’s initial promise in December to repair vehicles.

“It is very disappointing that the action plan remains silent about compensation,” BEUC, a Brussels-based European consumer organization, said in a statement. “A commitment to inform consumers is hardly a sufficient remedy when a company breached European Union consumer law. The European Commission should not settle for such poor promises.”

While Jourova called the agreement an “important step,” she had previously said she was working with consumer groups to ensure that the 8.5 million European owners are treated fairly. Volkswagen has consistently said that it wouldn’t offer anything beyond repairs in the region.

Closely Monitor

Following the meeting with Garcia Sanz, an EU official said it wasn’t the commission’s role to impose fines or order compensation. The official said that was ultimately a matter for national courts and enforcement authorities to decide on a case-by-case basis.

Jourova said in a statement that she “will closely monitor this commitment and continue to work with consumer organizations, authorities and Volkswagen.”

Volkswagen characterized the talks with Jourova as "good and constructive." Garcia Sanz plans to return to Brussels in December to keep the Commission informed about the progress of the recall in Europe, according to company spokesman Eric Felber.

VW is already facing the wrath of investors, with shareholders demanding more than 8.2 billion euros ($9.1 billion) in German courts alone.

Shares of the company rose 1.8 percent to 121.15 euros in Frankfurt trading at 12:52 p.m. Thursday. They’re still down 9.4 percent so far this year.

For EU consumers, VW “agreed that all the vehicles affected by the diesel emissions issue have to be brought in full conformity with the applicable [NOx] emissions regulations,” commission spokesman Christian Wigand said in a statement. VW “agreed to offer a comprehensive and transparent action plan for all affected consumers in the EU, including proof of conformity.”

He said the plan “will be carried out within a defined time-frame and include explanation on the process for affected consumers in each country” and that “Volkswagen commits to inform the customers by end 2016 and to have all cars repaired by autumn 2017.”

Volkswagen officials, including Chief Financial Officer Frank Witter, justified better terms in the $15 billion settlement with the U.S. government, saying the technology fix in Europe is easier, and that customers in its home market don’t face the same drop in their cars’ value.

Volkswagen’s cheating on tests of smog-causing emissions has reverberated across the globe in the last 12 months. Investors have lined up to sue in Germany, where VW shares plunged in the first two trading days after the mid-September 2015 disclosure of the emissions scandal by U.S. regulators. Some 1,400 lawsuits are currently pending at a court about 20 miles from Volkswagen’s headquarters, a judicial spokeswoman said Wednesday. 

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