Dieselgate: Volkswagen lawyers up

Volkswagen AG has retained attorney Kenneth Feinberg to act as the company’s US legal counsel to face the myriad of individual lawsuits and hundreds of class actions relating to the Dieselgate emissions scandal.

The company has admitted to deceitfully rigging about 11 million diesel-powered vehicles to cheat emission tests affecting the Audi, Porsche, Skoda and Volkswagen brands globally.

The legal backlash is expected to cost VW billions of dollars and has already cost several senior executives their jobs.

VW desperately wants to avoid costly protracted litigation. For the German car-maker the quicker this is over the better if the company is to salvage any remaining consumer loyalty from the almost 500,000 affected diesel owners in the US who have watched their vehicles’ values dive.

Volkswagen Group of America CEO Michael Horn announced Feinberg's appointment a week before Christmas.

Feinberg stated in an interview with Bloomberg that he will immediately develop a compensation strategy that will encourage people to seek settlement outside of the courtroom.

VW has already offered affected US customers a $US1000 compensation package that won't be replicated in Europe or Australia, where recall work is expected to begin next month.

Feinberg is extremely experienced in large-scale industrial settlements, having managed GM’s ignition switch compensation program that included mass injuries and deaths.

“At least in this case we’re not dealing with death,” said Feinberg. “We’re not dealing with physical injuries arising out of vehicle accidents. This is an economic problem and an environmental issue.”

Prior to VW and GM, Feinberg handled British Petroleum’s compensation for its massive Gulf of Mexico oil spill in 2010.

VW Group faced negative media attention and the wrath of US consumers in 1986 when Audi answered claims of 700 incidents of ‘sudden unintended acceleration’.

The controversy sent Audi’s North American sales into freefall -- from 74,061 in 1985 to 12,283 in 1991. VW North America cannot afford a repeat of the past, but its November sales dipped 24.7 per cent compared with November 2014.