Volkswagen Agrees to Settlement, New Lawsuit Targets Mercedes-Benz

volkswagen-tdi-badge

A couple of Germany’s largest automakers have had what can only be described as a terrible week.

Volkswagen has agreed to a plan that would compensate owners of cars affected by its diesel emissions violations, in addition to either buying back the cars, cancelling leases, or repairing vehicles.

This should be welcome news for owners of Volkswagen vehicles equipped with the 2.0-liter TDI engine who have seen their cars’ resale values plummet in the seven months since the scandal became public.

More details will become clear in the coming days but, in the meantime, another automaker may be exposed for also manipulating emissions data.

It’s been reported that VW will pay $5,000 to each U.S. customer as compensation, but that’s just the beginning of what will likely be a fallout that could cost well over $20 billion.

An Associated Press article says,

On Thursday, a U.S. federal judge said VW had agreed with the government to buy back as many as 482,000 diesel cars, as well as pay to make up for the cars’ pollution.

The cheating revelation last September also tarnished VW’s brand image and cost it billions in lost stock value. It still faces about 500 U.S. lawsuits and the potential for billions in government fines. The company had delayed its earnings announcement, but now says it will post a whopping net loss of 5.5 billion euros for last year.

Analysts at Warburg Research think the direct cost of fines, recalls and settlements worldwide will reach 28.6 billion euros — and that’s excluding any impact on sales and market share.

This is, quite possibly, one of the most expensive corporate scandals in world history. We’re closer to a resolution that should satisfy current TDI owners, but it could take months (or even years) before all of the pending litigation is settled.

Mercedes-Benz could be next.

Tests revealed earlier this year that the Mercedes-Benz C-Class BlueTec diesel emitted 40 times more pollution on the road than in the lab. A new lawsuit claims that BlueTec diesel models emit more nitrogen oxide when the temperature is cooler than 50 degrees Fahrenheit due to a “shut-off device.”

A Car and Driver story said,

Daimler has repeatedly denied it manipulated any emissions controls to pass tests as Volkswagen did, only mentioning that it was allowed by law to emit higher emissions in certain instances to protect the engine.

It doesn’t appear that Daimler will experience a crisis anywhere near the scale of Volkswagen, but it does give us another reason to question the environmental cleanliness of diesel engines.

Would you still consider a diesel engine for your next car?

-tgriffith

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Used Mercedes-Benz C-Class

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