Volkswagen and Mercedes-Benz suffered another blow in the long-running litigation over customers' right to payouts when their diesel cars were equipped with rule-breaking software to sidestep anti-pollution systems.
In a key ruling, judges at Germany's highest civil court decided they would allow more drivers to collect compensation and said carmakers can now escape liability only if they can prove there was no way to know the software they used was illegal.
The top judges sent the individual cases back to the trial courts to have them determine if and how much compensation can be sought under these guidelines.
In cases of negligence, car owners cannot return the vehicle and get the full price back, they ruled. Instead, they can get 5 percent to 15 percent of the car price minus the monetary advantages they had, such as using the car over the period.
The Federal Court of Justice in Karlsruhe was reacting to a March ruling by the Europeans Union's top tribunal that said the block’s emission rules also protect individual car owners, not just the public interest, and that national law must allow them adequate redress.
Before that, Germany generally did not grant compensation unless the carmaker acted intentionally, which is usually hard to prove.
"The owner of a car equipped with a defeat device suffers losses because of the risk that using it may be banned," the top court said in a statement after the ruling. "In favor of the purchaser, it must be assumed that the owner would not have bought it at full price."
Mercedes said the trial courts still need to determine whether the specific software used qualifies as a defeat device. Until another landmark EU court ruling from July 2022, authorities always approved the technology, so there was no way that Mercedes could have known it acted illicitly, the company said.
VW said it would win the retrials. In a case involving a VW-brand vehicle, the national transport regulator found the software was legitimate and VW could rely on these findings. In an suit concerning an Audi model, the driver purchased the car after the defeat device had been disclosed, so customers were adequately informed, VW said.
The diesel-rigging scandal was exposed in 2015, yet its repercussions continue to haunt the German car industry.
Volkswagen and Mercedes are still entangled in hundreds of suits by drivers seeking compensation. Monday's ruling could see even more drivers start an action as it now lowers the bar for collecting money related to cars produced after the scandal broke.
The cases are: BGH, VIa ZR 335/21 et al.