Brussels, Belgium - Germany's justice minister and Europe's industry boss have raised the pressure on Volkswagen to compensate European customers as well as US drivers for its diesel emissions scandal, potentially adding to a hefty bill.
Volkswagen has been mired in scandal since September 2015 when it admitted it had cheated on US emissions tests by using software known as “defeat devices” to mask nitrogen oxide emissions.
In the United States, Volkswagen Group of America has promised goodwill compensation worth $1000 (R16 700) each to tens of thousands of vehicle owners.
But in Europe, VW officials have said they will repair vehicles to remove illegal software, but have no plans to pay consumers compensation, arguing they have suffered no loss.
European Union industry commissioner Elzbieta Bienkowska, who has had a series of meetings with VW and will meet chief executive Matthias Mueller in Brussels on Thursday, wrote to him on 15 January with a list of demands.
High on the list was that the estimated 8.5 million European owners of VW cars fitted with illegal software, out of 11 million worldwide, should be compensated.
“I would like to ask you to reconsider your stance regarding compensation and reflect on the ways to offer compensation also to the European customers,” Bienkowska said in the letter.
The EU executive can apply only moral and political pressure in a very different legal framework from the United States.
“The issue of compensation goes beyond the difference in the legal set-up between the US and the EU and plays a fundamental role in viewing Volkswagen as a responsible and trustworthy company,” Bienkowska wrote.
Germany's justice minister Heiko Maas is also unhappy with the disparity in the way customers are being treated.
A ministry spokesman said during a regular news conference on Wednesday in Berlin: “Minister Maas has already said a few weeks ago that he considers an unequal treatment of US and European customers unacceptable,”
In Britain, London law firms have said thousands of British consumers had registered interest in potential lawsuits and lawyers say their claims hinge in part on whether cars can be fixed and performance is unaffected.
One British lawyer, speaking on condition of anonymity, welcomed Bienkowska's stance, saying the response of national governments had been “apathetic”.
“The difference of response between the EU and US has allowed Volkswagen to run a two-horse race,” the lawyer said.
VW FACES BIG BILL
Volkswagen has made a provision of €6.7 billion euros (R122 billion) globally for the repair process.
Apart from the repair bill, VW has the prospect of huge fines and litigation.
In the United States, VW faces fines of up to $46 billion (R770 billion) for allegedly violating environmental laws.
Germany has long worked to protect its car industry, weakening EU legislation that could damage its profits; EU sources say it is expected to continue negotiating to minimise the damage.
It has won backing from other governments fearing job losses if they hurt a sector that provides jobs for 12 million people and accounts for four percent of the European Union's gross domestic product.
Slowly, however, political and public pressure is growing. Lawyers have begun private litigation against Volkswagen, while the European Parliament has set up a committee of inquiry into why EU regulations failed to prevent Volkswagen's use of illegal software.
Bienkowska's letter also asked for precise detail on the number of vehicles affected by illegal software and technical details on “corrective measures”.
The European Union regulatory regime is likely to remain different from that of the United States, where the Environmental Protection Agency has enforcement powers.
But the European Commission is seeking to wrest some of the responsibility for policing the car industry from member states, through legislative proposals on national car approval bodies to be published next week.
Separate proposals expected later this year would require carmakers to give full details of the emission performance of their cars, including nitrogen oxide levels as well as carbon dioxide, making it easier for consumers to challenge them for excessive pollution.