Volkswagen appeals eye-watering penalty after misleading about diesel emissions

Volkswagen will have to pay an eye-watering penalty after it misled consumers about its vehicles in a major scandal.

Volkswagen has lost its appeal against an eye-watering penalty imposed by the Federal Court for lying about their compliance with Australian diesel emissions standards.

The global car manufacturer was ordered to pay $125 million in 2019 – the highest penalty ever handed down for breaches of Australian consumer law – after the consumer watchdog took them to court in 2016.

Volkswagen was found to have misled consumers and regulators about whether their diesel vehicles complied with environmental standards – a scandal later referred to as “Dieselgate”.

The Australian Competition and Consumer Commission (ACCC) said the company made false representations when seeking to import more than 57,000 diesel vehicles between 2011 and 2015.

Car manufacturer Volkswagen appealed the eye-watering $125 million penalty imposed by Australia’s Federal Court.

ACCC Chair Rod Sims said Volkswagen did not disclose that the vehicles were fitted with two mode software, which caused them to operate in one mode for the purposes of emissions testing and another when being driven.

“If tested in that second mode, the vehicles would have breached Australian emissions standards,” Mr Sims said.

“It deprived consumers who may have deliberately sought to buy a low emissions vehicle of the ability to make an informed decision.”

Volkswagen appealed the $125 million penalty, arguing the amount was “manifestly excessive” and the original penalty amount of $75 million should have been imposed.

That figure was initially agreed between the company and the ACCC until the court increased the amount.

On Friday, the Federal Court dismissed the appeal and upheld the $125 million penalty was “not excessive”.

Mr Sims said the record penalty reflected how “egregious” Volkswagen’s conduct was.

“This record penalty increases the signal to large corporations that they could face massive penalties for misleading consumers about their products,” he said.