Germany top court on Friday backed Volkswagen owners' claims against the firm over cars rigged to cheat regulatory emissions tests, in an opinion that could guide lower courts' rulings.

"In the case of a vehicle delivered to the buyer with an illegal defeat device… the presence of a material defect can be assumed," the Federal Court of Justice (BGH) said in a statement.

VW fitted millions of vehicles worldwide with so-called "defeat devices", shorthand for software that reduces output of harmful emissions like nitrogen oxides (NOx) during testing — only to allow it to increase many times over once on the road.

When a car is equipped with the cheating technology, "there is a danger that the authorities could forbid its operation," preventing the owner from using it for its intended purpose, the judges said.

VW has always insisted that since the cars remain functional, there is no legal requirement for it to replace them or pay compensation.

The opinion did not say what action the carmaker should take to correct the "defect" represented by a defeat device, such as replacing or refitting vehicles or compensating drivers.

But it is the first hint of their thinking at a time when tens of thousands of VW owners' cases are working their way through the justice system.

Judges issued their "preliminary legal view", which is not binding on lower courts but could guide their deliberations, after an owner of a VW car appealed a ruling in favour of the auto giant.

While the driver has since withdrawn his case after reaching a settlement with the Wolfsburg-based group, the top judges decided to publish anyway.

Of the 11 million vehicles VW and its subsidiaries sold worldwide with defeat devices, some 2.4 million were bought by German customers.

Since admitting to "dieselgate" in 2015, the scandal has cost VW some 28 billion euros ($31.75 billion) for fines, compensation, buybacks and refits.

Much of that sum has poured out to 500,000 customers in the United States, with European buyers so far going without reimbursement or compensation.

In Germany the group has paid only two fines, worth a combined 1.8 billion euros.

Germany fines BMW 8.5 mn euros over diesel emissions
Frankfurt Am Main (AFP) Feb 25, 2019 –

German prosecutors said Monday they had fined high-end carmaker BMW 8.5 million euros ($9.6 million) over diesel cars with higher harmful emissions than allowed, while adding the infraction was down to error rather than deliberate fraud.

"Munich prosecutors have ordered a fine of 8.5 million euros for the administrative offence of negligence in quality control," investigators said in a statement.

Authorities had been probing BMW since early 2018 over suspicions it could have built a so-called "defeat device" into some diesel cars.

Such technologies allow the vehicle to reduce emissions under test conditions, while emitting far higher levels of pollutants such as nitrogen oxides (NOx) on the road.

In Germany, Volkswagen has paid one billion euros in fines over defeat devices following its 2015 admission that it installed them in 11 million cars worldwide, while high-end subsidiary Audi has paid 800 million euros.

And last week, prosecutors in Stuttgart said they had opened a "fine proceeding" against Mercedes-Benz maker Daimler over the same suspicions relating to 700,000 cars.

But the number of vehicles showing irregularities in BMW's case is far smaller, at just under 8,000.

Prosecutors said that they believed "mistaken labelling of the part of the motor control software responsible for exhaust treatment" was behind increased on-road emissions.

"Extensive investigations" had found neither evidence of a purposely designed defeat device, nor of intent to commit fraud by BMW employees, they added.

Rather, "the company had not set up an appropriate quality control system" that could have prevented the error or revealed it after the fact, the prosecutors found.

Investors appeared little moved by news of the fine, with shares in BMW adding 1.3 percent at 74.05 euros by 10:30 am in Frankfurt (0930 GMT), against a DAX index of blue-chip shares up 0.5 percent.

In its most recent financial data release, BMW said it made a net profit of 1.4 billion euros between July and September, down 24 percent year-on-year as it contended with tough new emissions tests in the European Union.