Volkswagen settles initial ‘dieselgate’ claims with £193m payout

Volkswagen has agreed to pay £193m to settle 91,000 legal claims in England and Wales linked to the “dieselgate” emissions scandal that rocked the German carmaker.

The claimants will receive average payments of more than £2,100 each after joining the action that alleged cars made by Volkswagen group, including its Audi, Seat and Skoda brands, emitted more nitrogen dioxide than the company claimed. The high court in London dismissed the proceedings on Wednesday after the settlement.

The carmaker will also pay out an amount thought to be in the tens of millions of pounds to cover the claimants’ legal costs, as well as other fees thought to include the costs levied by investors who backed the legal actions.

The dieselgate scandal erupted in 2015 after Volkswagen was found to have installed illegal “defeat devices” to cheat emissions tests. It has become one of the costliest corporate scandals in history. The company has spent more than €30bn (£26bn) in legal fees and payouts to customers, including a $15bn (£12bn) settlement in the US. A fraud trial of the former VW chief executive Martin Winterkorn has been delayed because of his ill health.

Volkswagen did not admit any wrongdoing as part of the settlement. In a press release it said settlement was the “prudent course of action commercially” to avoid the legal cost of a six-month trial and possible appeals. The company believes too much time has passed since the scandal emerged in 2015 for other owners to bring claims, although there are two other British claims in the early stages of litigation.

A series of other carmakers face litigation for similar claims in the UK, including Mercedes-Benz, BMW, Jaguar Land Rover, Stellantis, Nissan, Renault, Ford and Volvo. The total number of claimants in the country is thought to be well over 1 million.

Philip Haarmann, VW’s chief legal officer, said: “The Volkswagen Group is pleased that we have been able to conclude this long running litigation in England and Wales. The settlement is another important milestone as the Volkswagen Group continues to move beyond the deeply regrettable events leading up to September 2015.”

Volkswagen has already paid out billions in settlements across the world related to dieselgate, but the matter has taken longer in England and Wales because of a different system that does not easily allow for US-style “class actions”, under which lawyers can take action on behalf of a whole group of claimants without needing their explicit approval.

Instead, the law firms involved have to spend time and money finding claimants and persuading them to sign up. The firms involved were Slater and Gordon, Leigh Day and PGMBM.

Tony Winterburn, a partner at PGMBM, said: “This is a good day for the claimants and is the culmination of five years of hard-fought litigation.”

Shazia Yamin, a partner at Leigh Day, said: “The settlement of this case is important because it was the first case to get going and the first to be settled. It’s a big moment for consumers.

“It’s a really important milestone that when consumers join these claims there can be something at the end.”