Volkswagen owners want payback over pollution-control cheating

The logo of a Volkswagen dealership is pictured in Pasadena, California on Sept 21, 2015.
The logo of a Volkswagen dealership is pictured in Pasadena, California on Sept 21, 2015. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - John Decker bought his 2013 Volkswagen Jetta diesel thinking he was doing his part to improve the environment and reduce his carbon footprint.

Now that the German automaker has admitted its claims about the model's performance were false, he just wants the company to buy it back from him.

"I feel completely deceived by Volkswagen," Mr Decker, of Sacramento, California, said in an interview. "I'm extremely upset about it. I feel defrauded."

Decker is in good company: 482,000 Audi and Volkswagen cars sold in recent years came with software that turns on full pollution controls only when the car is undergoing emissions testing. At other times, the cars pollute 10 times to 40 times the legal limits.

The US Justice Department, the Environmental Protection Agency and regulators in California are all investigating. Eventually, the cars may be recalled and cash settlements - or a buyback like Decker wants - may be negotiated. Volkswagen has suspended sales of the affected models in the meantime.

Edmunds.com, which operates an online car-buying guide, is advising Volkswagen owners to hold onto theirs for now - if for no other reason than they're likely to get lower prices in a sale or a trade-in at a dealer.

Owners who bought diesels for their environmental benefits may feel a moral objection to driving them until there's an emission fix, said Jessica Caldwell, the website's director of industry analysis.

"The good news for these owners is that there is no imminent safety threat in driving these vehicles," Mr Caldwell said. "But until Volkswagen reveals a plan for how they will either buy back the cars or fix them so that they truly meet emissions standards, all affected owners will have to wait and see."

The affected vehicles are diesel-powered versions of some of VW's most popular US cars: the Beetle, the Jetta, the Golf and the Passat for model years 2009-2015. The Audi A3 is also part of the investigation.

The cars haven't been recalled, but the EPA has the power and expects to invoke it, according to agency spokeswoman Liz Purchia. Vehicle owners will get notices after Volkswagen and Audi have developed a way to fix the cars' emissions controls, Ms Purchia said.

Justice Department "Determinations regarding potential penalties and other remedies will be assessed as part of the investigation EPA has opened in conjunction with the U.S. Department of Justice," Ms Purchia said.

A fix that improves the emissions may reduce on-the-road performance, said Bill Visnic, an independent auto analyst in Weirton, West Virginia. It would be very difficult for Volkswagen to add new pollution-control equipment to the existing engines, so the only way to fix it may be to cut horsepower and fuel economy performance to lower the pollution output once the software is eliminated, he said.

That would diminish one of the primary selling points of the vehicles.

Mr Decker, a photographer, said he was impressed with the performance of his Jetta TDI sportwagon, especially compared to other cars that are environmentally friendly, such as the Toyota Motor Corp. hybrid Prius.

Mr Decker wants Volkswagen to compensate him for the purchase. He said he has been in contact with the law firm of Hagens Berman Sobol Shapiro LLP in Seattle, which announced Sept 18 that it was filing a federal lawsuit against Volkswagen. The firm estimates that some consumers paid as much as US$7,000 more for a diesel model.

"I don't want my car anymore, frankly," Mr Decker said. "I'd like Volkswagen to buy it back from me. I really don't want it. I don't want to drive it. I don't want anything to do with Volkswagen."

The primary goal of environmental regulators will be to clean up emissions. It remains to be seen what kind of compensation consumers will get. Websites like VolkswagenOwnersClub.com were abuzz with members asking how they could join class-action lawsuits and whether emission fixes would harm their cars' performance.

All US states follow either federal or California rules on limiting tailpipe pollution, said Paul Miller, deputy director of the Northeast States for Coordinated Air Use Management, an organization that helps set policy for New York, New Jersey, Massachusetts and five other states.

Regulators probably won't order cars off the road since that would punish the drivers, who didn't do anything wrong, he said.

In some cases where regulators have determined cars don't meet safety or other standards, car owners get cash. Last year, Ford Motor offered US$200 to US$1,050 in rebates to 200,000 consumers for inflated fuel-economy claims.

In a recent safety-related recall, the Transportation Department went even further, forcing Fiat Chrysler to buy back defective Jeeps. It's not clear whether the EPA has the same authority, but with potential fines of as much as US$18 billion, the automaker may be willing to negotiate a settlement.

Then there are civil lawsuits.

"This is as big a thing as I've seen on the legal landscape in a long time," said Robert A. Clifford, a Chicago lawyer who has filed a lawsuit on behalf of VW owners.

While it's too early to say how VW diesel owners would be compensated, possibilities include payment for a vehicle's loss of value, punitive damages for the company's intentional misconduct and even money for people's emotional distress, according to Clifford, a partner with Clifford Law Offices.