In our autumn edition of the newsletter (http://ow.ly/T4d9z), we reported on the VW emissions rigging revelations and the implications for insurers, as the scandal was beginning to unfold at that time.
Since September 2015, VW has admitted that 3.3m Audi and Skoda diesel cars were also built with the illegal software (this is in addition to the 11m VW cars affected) and that CO2 figures for around 800,000 cars were also rigged so that the fuel economies were overstated (although the extent of the CO2 scandal has since been scaled down to around 36,000 cars).
In November 2015, VW announced that all affected owners would receive compensation and US affected owners have since received a $1,000 gift card to be redeemed against new cars purchased before 30 April 2016. US investigators have also increased the pressure on VW by demanding $45bn in damages and rejecting VW's recall plans.
Efforts to bring VW to account in the UK and Europe have been less progressive, possibly due to concerns about competitiveness in an industry which employs 121m people in the EU. In addition, emissions thresholds are different in the EU. VW is presently refusing to offer any compensation to its European customers on grounds that there is no evidence of loss – it has rejected the possibility of any price devaluation of its vehicles, but recognises there may be an increase in road tax in some jurisdictions, which it has said it will compensate in due course.
As things stand at the time of writing, VW Executives have admitted illegal practices in the US but the VW Board recently maintained in a statement to the New York Times that the devices are not forbidden under European Rules.
Whilst investigations into VW continue both in the US and in Europe, two German law firms have announced that they have issued proceedings in Germany on behalf of a UK pension fund following the fall in VW's shares. In addition, there are now press reports suggesting that Renault may have also been involved in emissions rigging and the company is reportedly withdrawing 15,000 of its 'Captur' models. The potential exposure for VW (and possibly other car manufacturers) and their D&O insurers remains significant. We are monitoring the situation closely and will report further developments in future editions of the newsletter.