VW ordered to pay record penalties

Australia’s Federal Court has ordered Volkswagen AG to pay $125 million in penalties, after it declared by consent that Volkswagen breached the Australian Consumer Law by making false representations about compliance with Australian diesel emissions standards.

The amount is the highest total penalty order ever made by the court for contraventions of the Australian Consumer Law.

Volkswagen admitted that when it sought approval to supply and import more than 57,000 vehicles into Australia between 2011 and 2015, it did not disclose to the Australian Government the existence of ‘Two Mode’ software.

Volkswagen admitted that when switched to ‘Mode 1’ for the purposes of emissions testing, the software caused its vehicles to produce lower nitrogen oxide (NOx) emissions, but when driven in on-road conditions, the vehicles switched to ‘Mode 2’ and produced higher NOx emissions.

“Volkswagen’s conduct was blatant and deliberate,” said ACCC Chair, Rod Sims. “This penalty reflects a trend of ever higher penalties for breaches of Australian consumer law.

“Essentially, Volkswagen’s software made its diesel cars, utes and vans operate in two modes. One that was designed to test well and another that operated when the vehicle was actually being used and which produced higher emissions. This was concealed from Australian regulators and the tens of thousands of Australian consumers driving these vehicles.”

The ACCC said Volkswagen engineers designed the Two Mode software in 2006 and it was kept secret until discovered in 2015.

All new motor vehicles supplied or imported into Australia must comply with Australian standards for exhaust emissions.

“If the affected Volkswagen vehicles had been tested while operating in the mode Australians were driving in, they would have exceeded the NOx emissions limits allowed in Australia.”

Volkswagen also admitted that it made false representations when applying for the vehicles to be published on the Government’s Green Vehicle Guide website.

“Volkswagen vehicles would not have obtained the ratings that they did on the Green Vehicle Guide website if the Government had been made aware of the effect of Two Mode software on the emissions testing results,” said Sims.

“Volkswagen’s conduct undermined the integrity and functioning of Australia’s vehicle import regulations which are designed to protect consumers.”