Volkswagen Canada reaches deal to compensate customers affected by emissions scandal

Volkswagen Canada has reached a proposed deal to compensate about 105,000 Canadian vehicle owners affected by an emissions scandal that rocked the company.

Affected owners will get between $5,100 and $8,000, depending on make and model of their vehicle

Canadian owners of affected VW diesel engine powered vehicles will be getting compensation under the terms of a proposed legal settlement announced Monday. (Gene J. Puskar/Associated Press)

Volkswagen Canada has reached a proposed deal to compensate about 105,000 Canadian vehicle owners affected by a diesel engine emissions scandal that rocked the company.

A deal between the company and drivers of vehicles with 2.0-litre TDI engines who launched a class-action suit has been approved in principle and was expected to be signed Monday in Ontario Superior Court in Toronto. A similar court action was also taking place in Montreal.

If the proposed settlement gets court approval in Ontario and Quebec in March 2017, it will become final at the end of that month, after which Canadians will get their settlements.

To be eligible for compensation, the 2.0-litre TDI-equipped vehicles must be one of the following makes and model years:

  • VW Jetta, 2009-2015.
  • VW Jetta Wagon, 2009.
  • VW Golf, 2010-2013, 2015.
  • VW Passat, 2012-2015. 
  • VW Beetle, 2013-2015.
  • VW Golf Wagon, 2010-2014.
  • VW Golf Sportwagon, 2015. 
  • Audi A3, 2010-2013, 2015.

Under the deal, owners will be able to sell their vehicles back to the company, trade them in for new vehicles or get them repaired. Affected Canadian owners will also get between $5,100 and $8,000 in compensation, depending on the make and model of their vehicle.

People will have until March 4, 2017, to opt out of the settlement or object to it.

Jon Prystayko of Calgary, Alta., has been waiting since September 2015 to hear how Volkswagen would compensate Canadian owners of vehicles caught up in an emissions scandal. (CBC)

Jon Prystayko of Calgary owns a 2012 VW Jetta TDI, which he said he bought because of its good fuel economy. However, in the wake of the emissions scandal, he has only been using the car as his "winter beater."

"I don't want to put any work into it or do any maintenance, because I didn't know what was happening," he told CBC News.

Waiting to hear how VW would compensate drivers since the scandal erupted in September 2015, Prystayko said his reaction to news of the settlement was "neutral."

"I am disappointed with how long it took, but at the same time, I will be satisfied when I have that money in my hands and my vehicle back in VW's hands," he said.

Prystayko said he bought a newer VW vehicle with incentives the company offered, and now he just wants to be done with his diesel.

'A huge number'

The total settlement will be worth about $2.1 billion if all drivers claim the amount they are owed, said Harvey T. Strosberg, who is a co-lead counsel for the class-action lawsuit.

  "It's a huge number," said Strosberg. "No corporation has paid that money in Canadian history. It is a watershed moment." 

The drivers have been waiting since it was learned in 2015 that many VW vehicles were fitted with software to fool emissions tests. Vehicles fitted with the cheat emitted nitrogen oxide at a level many times more than permitted under pollution standards. 

The settlement doesn't include an admission of responsibility from VW Canada.

A Volkswagen Jetta TDI diesel engine is displayed at the Los Angeles Auto Show in this November 2008 file photo. (Damian Dovarganes/Associated Press)
  "Volkswagen's primary goal has always been to ensure our Canadian customers are treated fairly, and we believe that this proposed resolution achieves this aim," said Volkswagen Group Canada president and CEO Maria Stenstroem in a release.

"We are working hard to earn back the trust of our customers, dealers and regulators, and today is an important step in that effort," she said, thanking Canadian customers for their patience.

Ontario Superior Court Judge Edward Belobaba called the deal a "slam dunk" class action.

Federal penalty

Meanwhile, the federal Competition Bureau said it has reached a consent agreement with Volkswagen Canada and Audi Canada for an additional $15-million penalty.

The bureau said the agreement was negotiated to address its conclusions that false or misleading environmental marketing claims were used to promote some vehicles with 2.0-litre diesel engines.

  "The bureau's investigation found that Volkswagen Canada and Audi Canada misled consumers by promoting vehicles sold or leased in Canada as having clean diesel engines with reduced emissions that were cleaner than an equivalent gasoline engine sold in Canada," the agency said in a release.

The Competition Bureau said the settlement announced Monday does not resolve its ongoing inquiry into vehicles equipped with some 3.0-litre diesel engines.

VW reached a compensation deal with about 475,000 U.S. owners of vehicles with 2.0-litre diesel engines in August, and it was approved by a judge in late October. 

U.S. VW owners can opt to have the company buy back their vehicles regardless of condition for the full trade-in price on Sept. 18, 2015, the day the scandal erupted, or pay for repairs. U.S. owners will also get between $5,100 and $10,000 US each, conditional on the age of the vehicle and whether the owner had it before Sept. 18 of last year.

Strosberg said the terms of Canadian and U.S. settlements are structured similarly, but the legal landmarks in each country are different.

"For example, the punitive damages are enormous in the U.S. They have [product] recall statutes that make treble damages. We don't have something like that here, but we have a fair and reasonable system."

He also said the values of the vehicles in Canada will be different than in the U.S.

"I think that the vehicles in Canada were older than the vehicles in the U.S., for example," he said.

On Monday, a judge in San Francisco gave attorneys for the U.S. government, VW and car owners until Tuesday to reach a settlement deal covering about 80,000 vehicles equipped with 3.0-litre diesel engines.

With files from The Associated Press