VW won′t compensate European diesel car owners | Business| Economy and finance news from a German perspective | DW | 21.01.2016
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VW won't compensate European diesel car owners

Volkswagen has said it won't compensate EU car owners affected by its diesel emissions fraud. But the German carmaker confirmed it would fix the cars. It's a controversial position not liked by the EU executive.

Elzbieta Bienkowska, the European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, has been pushing Volkswagen Group to compensate European diesel car owners on the same basis as its American customers in the wake of VW's diesel emissions fraud. VW's US clients are being given $1,000 each (920 euros) in the form of cash and vouchers, in addition to having their motors fixed to bring emissions down.

But after a meeting between Bienkowska and Volkswagen Group CEO Matthias Müller on Thursday in Brussels, a VW spokeswoman said the company would not grant the same deal to its European customers.

The company argued that it was paying extra compensation in North America because it had yet to agree with local regulators how to fix affected vehicles, and so customers there would have to wait longer for a solution than elsewhere. In Europe, it was focusing on repairing and servicing the diesel motors.

That stance didn't appear to sit well with Bienkowska: "Commissioner Bienkowska invited the group once again to reflect on adequate ways to compensate consumers," a spokeswoman for the European Commission, the executive arm of the EU, said after the talks in Brussels.

Volkswagen at CES

VW's long-term strategy in the face of the diesel emissions scandal is to steer away from diesel engines and invest in electric vehicles, such as this prototype presented at the Consumer Electronics Show in Las Vegas in January

Cost reductions

Also on Thursday, the company denied reports in Germany's "Manager Magazin" saying the company may be planning to cut more than 10,000 jobs from its core-brand car production lines.

"We strictly reject this false report," the company said. "We are firmly committed to our core workforce." VW employs about 120,000 workers under the terms of a collective agreement.

The company has confirmed, however, that it would continue to make efforts to reduce costs, given currently poor profitability of the passenger car division.

The head of the company's works council, Bernd Osterloh, drew a red line, saying that the workforce's cooperation in implementing planned cost reductions would be contingent on "a guarantee on the side of the company that the workforce's jobs are secure and will remain so."

The two issues - compensation to diesel car owners and protecting VW jobs - are linked through the company's balance sheet. More money allocated to compensation payments would leave less available for securing the workforce.

Penance for corporate sin

VW admitted in September that it had cheated US emissions tests by using engine management software that allowed its diesel engine cars to detect when they were undergoing emissions tests. The software then changed the engine's fuel-burning behavior to minimize pollution. But whenever the cars were on the road, the software ran the engines to maximize power rather than minimize emissions.

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The result: Nitrogen oxide emissions an order of magnitude higher than allowable by law - emissions that can cause respiratory disease. Around 11 million vehicles worldwide may have had the software installed, including about 8.5 million cars in Europe. The result was a huge scandal after the US Environmental Protection Agency revealed that it had been alerted to the scam by an independent emissions testing laboratory.

Political consequences

The European Parliament has named the members of a 45-person investigative committee that will be charged with looking into the emissions scandal. Parliamentarians suspect that it was not only VW that cheated on emissions.

The committee will look into regulatory and administrative failures by the European Commission as well as contraventions of EU law by the car industry. An interim report is to be tabled within six months, and a final report delivered by the beginning of 2017 at the latest.

The committee will have its first meeting in February.

nz/hg (dpa, Reuters, AFP)

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