Volkswagen and the Federation of German Consumer Organisations (VZBV) confirmed on 5 January 2020 that they have opened settlement talks over the 2015 diesel-cheating scandal that affects 446,000 German car owners. The negotiations, urged by the Braunschweig Higher Regional Court last September, could end Germany’s largest consumer class action yet remain preliminary and confidential.
Background of the dieselgate case
The scandal erupted in September 2015 when the U.S. Environmental Protection Agency accused Volkswagen of fitting diesel engines with software that sensed when a vehicle was on a test rig and temporarily cut nitrogen-oxide output. Once the car returned to normal roads, emissions soared to as much as 40 times the legal limit. Volkswagen later admitted that roughly 11 million cars worldwide, including models from Audi, Seat and Skoda, carried the so-called defeat device. In Germany alone about 2.4 million vehicles were sold with the manipulated EA 189 engine.
Criminal probes, shareholder suits and regulatory fines followed. By the start of 2020 the company had booked more than €30 billion in provisions for penalties, buy-backs and retrofit costs across the globe. While U.S. consumers began receiving cash payments in 2016, German owners waited years for a comparable remedy, arguing that resale values fell and that they had bought cars advertised as “clean diesel” on the basis of false data.
German class action takes shape
A change in German civil procedure in November 2018 finally allowed qualified consumer groups to bundle similar claims in a single lawsuit. The VZBV, backed by the law firm Hausfeld, registered the first such “Musterfeststellungsklage” in January 2019 on behalf of 446,000 diesel buyers. The suit demands that Volkswagen repay a proportion of the purchase price, plus interest, for vehicles that cannot meet emission limits without hardware fixes.
Christine Röttgers, chair of the VZBV management board, told reporters on 4 January 2020: “Our members want a practical answer after four years of uncertainty. A structured settlement could deliver money faster than a trial that might last until 2022.” The case is being heard in Braunschweig, close to Volkswagen’s Wolfsburg headquarters, because the court covers the district where the parent company is registered.
Early-stage settlement talks begin
Presiding judge Michael Hagen suggested in open court on 30 September 2019 that both sides explore “a consensual path.” Volkswagen’s board accepted the invitation in December, and the first meeting with VZBV lawyers took place shortly before Christmas. The company stressed that no figure has been tabled and that liability remains disputed. “We are entering discussions in good faith, but a binding agreement is not assured,” a Volkswagen spokesman said on 5 January.
Legal Reports note that any deal must satisfy both the consumer group and the hundreds of thousands of individuals who can opt out if the terms seem too low. Court filings indicate that buyers of newer models with Euro-6 engines may receive smaller offers than owners of older Euro-5 cars, which need costlier hardware updates. Payments could also vary by mileage and engine variant, complicating the arithmetic.
Financial and reputational stakes
Even a modest per-car settlement would add hundreds of millions to Volkswagen’s diesel bill. Investors reacted cautiously: shares in preferred stock dipped 0.8 percent in Frankfurt trading on Monday morning, reflecting concern that fresh provisions might eat into 2019 earnings due for release next month. Yet analysts at Bernstein Research argue that clarity at home would remove a key legal overhang and let Chief Executive Herbert Diess focus funds on electric-vehicle expansion.
Reputationally, a German payout could soften criticism that the company treated domestic customers worse than Americans. German transport minister Andreas Scheuer has repeatedly urged the industry to “take responsibility toward local consumers,” while environmental groups continue to stage protests outside dealerships. A settlement may also deter further individual filings: more than 60,000 separate cases are still pending in German regional courts.
What happens next
Judge Hagen has paused witness hearings until 17 February 2020 to give negotiators space. Both sides must report progress by that date; if talks collapse, the court will resume evidence gathering and could deliver a ruling late this year. Volkswagen says retrofitting hardware to 830,000 German vehicles remains on track regardless of any consumer payout, and the company continues to contest charges of intentional harm.
For drivers, the VZBV has set up an online portal where claimants can monitor developments and later vote on a proposed deal. Anyone who accepts an offer would waive further legal action against Volkswagen, while those who reject it retain the right to pursue individual suits. “Speed and fairness rarely align in complex litigation,” said Klaus Müller, former head of the German consumer protection agency. “The next eight weeks will show whether this negotiation is the exception.”
Volkswagen’s diesel crisis has already redrawn rules on emissions testing and cost the company its once-sterling reputation for engineering integrity. A domestic settlement would not erase the fraud, yet it could bring one chapter to a close for nearly half a million German motorists still driving cars that pollute far more than advertised.
