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Project titleDate Month 2014 November 2015

Volkswagen Group NOx and CO2 Emissions Scandal

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Slater & Gordon – Group Litigation Lawyers

• Group Litigation is delivered though our London office  for claimants in multi-party claimant actions

• Particular emphasis on cases involving  large scale  mis-selling of financial products, pensions and mortgages, investor and shareholder deception and product liability cases against manufacturers/distributors.

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Background• The United States' Environmental

Protection Agency (EPA) issued a notice of violation of the Clean Air Act to Volkswagen Group (“VW”), after it was found that VW had intentionally programmed TDI diesel engines to activate certain emissions controls only during laboratory emissions testing.

• The programming caused the vehicles' nitrogen oxide (NOx) output to meet U.S. standards during regulatory testing, but produce up to 40 times higher NOx output in real-world driving.

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• An estimated 11million cars worldwide included such programming.

• 1.2 million have been confirmed to have been sold in the UK made up of:

• Volkswagen Passenger Cars – 508,276

• Audi – 393,450• SEAT – 76,773• ŠKODA – 131,569• Volkswagen Commercial Vehicles –

79,838

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Why did Volkswagen manipulate emissions data?

• Models manufactured from 2009 contained a new fuel injection system which allowed for higher fuel injection pressure and ultimately better control of emissions.

• But the system failed to combine good fuel economy with compliant emissions.

• VW therefore chose to programme the engine to switch from good fuel economy / high emissions mode to poor fuel economy / low-emission compliant mode when it detected an emissions test.

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• Manufactures typically use an additive such as urea to reduce the harmful emissions.

• When a small amount of this fluid is injected during the running of the car, it can lower production of Nitrogen Oxide.

• The system used to inject the fluid can be expensive, however, and this can be a concern particularly on the price-sensitive end of the market which VW was concerned with.

• Programming the cars to cheat the tests was therefore carried out for cost-saving purposes.

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Proposed Time-Table to fix the cars

VW said it will fix the affected cars starting with• 2.0 litre engines - from 29

February 2016;• 1.2 litre engines - from 30 May

2016; and• 1.6 litre engines - from 26

September 2016.

Fixes will either be a software update or a mechanical fix depending on the model and engine size of the car.

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CO2 Cheating• As well as cheating tests for NOx, VW have also

under-reported test results for CO2 emissions.• Unlike NOx there is no altered software for cars

affected by CO2 cheating.• Instead VW simply reported lower CO2

emissions for around 800,000 cars worldwide than was actually being emitted.

• CO2 under-reporting affects petrol and diesel cars (NOx is only diesel).

• These cars cannot be fixed as they are simply more polluting that consumers were led to believe.

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Potential Losses • Time off the road – unknown at this

stage. Certain models will need mechanical fixes, some only software fixes

• Reduced MPG and therefore higher fuel costs over the life of the vehicle

• Increased road tax liability

• Reduction in value. Already seeing 5% fall in value compared with un-affected cars

• Reduction in profits for businesses

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Causes of Action

• It is likely that consumers and businesses will have various causes of action with which to launce a legal claim against VW including but not limited to: – Breach of contract including

express and implied terms– Negligence – Misrepresentation – Deceit

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Goodwill Payments and Buy-Back Schemes

• Goodwill payments of up to $1,250 per NOx affected car being reported for VW customers in USA.

• Pressure to extend this to all 1.2m UK consumers.• But proceed with caution as need to make sure you are

not inadvertently agreeing to settle any claim by accepting the goodwill payment.

• VW is also floating the idea of a buy-back scheme for those CO2 affected cars that are 10% or more above emissions limit and is said to have set aside €2bn for this.

• Buy-Back may not happen for NOx affected cars as they can be fixed.

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Issues for Credit Hire Industry

• The NOx and CO2 scandals have caused major disruption to VW and its day-to-day business.

• Disruption being felt in repairing cars with everyday faults and parts now harder to get hold of causing delays in getting cars back on the road.

• Criticism from insurers being felt already.• Expect disruption to continue as VW deals with fixing 1.2m

cars over next 12 – 24 months. • Also face depreciation of car and loss of faith in brand leading

to reduction in demand for VW cars. • Risk of being left with VW stock and lack of demand for VW

group cars due to scandal.• Cars affected by CO2 may mean higher road tax payments

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Next Steps

• Register with us

• Keep up to date with latest news via our website.

• Launch legal claim for any losses not compensated for by VW including any loss of profits or opportunity.

www.slatergordon.co.uk/vw

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Thank you