Volkswagen Faces Lawsuit From Dealers Claiming Fraud Over Diesel Emissions

Apr 08, 2016 11:12 AM EDT | V Doctor

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Three family-owned auto dealerships are suing Volkswagen for fraud over the diesel emissions of its cars. In 2015, the German auto manufacturer was embroiled in a scandal after it confessed that it fitted software that let its diesel-engine cars to cheat on exhaust emissions tests.

According to Volkswagen, 600,000 of its diesel-engine vehicles in the United States were fitted with the cheating software. Since its admission, auto dealers have experienced a huge drop in Volkswagen sales with many across the country having to keep several diesel cars that fail to sell. It was the first time since 2002 that the company experienced a drop in worldwide sales.

Auto dealers claimed to have a right to be aggrieved with Volkswagen’s actions, the  reports. The company admitted to car dealers that the “defeat devices” were actually fitted into the vehicles to allow these to pass emissions tests, despite failing the standards in reality. Actually, the cars with the cheat devices emitted up to 40 times more than the allowed amount of nitrogen oxide.

However, Volkswagen was able to sell several units to auto dealers for a significant sum after it admitted its fault, but before the news became public. According to one auto dealer, he was not aware about the diesel scandal that would leave him with several unsold units and lost revenue. The lawsuit accused the carmaker of “remarkable hubris” and having little care for its auto dealers, customers and the entire planet.

The lawsuit also accused the company of inappropriately favoring some dealers more than others and compelling retailers to enter financing schemes with a company lending group.

Volkswagen is currently reviewing the complaint from Ed Napleton, the auto dealer who acquired an Urbana dealership after the scandal. Jeannine Ginivan, a Volkswagen spokeswoman, stated that the company is quickly working to fix its problems with federal regulators and to earn back the trust of dealers, consumers and the public.

The company may be facing several problems in the following weeks. Such as a giant fine by the Environmental Protection Agency, a case by the Federal Trade Commission for false advertising, and more class-action lawsuits may be filed by both consumers and auto dealers. In March 2016, Volkswagen fired Michael Horn, its U.S. head, in response to the scandal.

A federal judge has set an April 21 deadline for Volkswagen to reach an agreement with regulators, The  cited. More updates and details are expected soon.

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