VW says it is weighing up whether to appeal record penalty, which was handed down after judge rejected earlier deal

This article is more than 9 months old

This article is more than 9 months old

German auto giant Volkswagen AG says it is weighing up whether to appeal an Australian record $125m fine for deceiving customers and breaching diesel emissions standards, stating that it believed an initial $75m penalty agreed with the ACCC was “fair”.

The fine – the biggest on record for a breach of Australian consumer law – was handed down on Friday after the federal court declared by consent Volkswagen AG did not disclose the existence of “two-mode” software when it sought approval to supply and import more than 57,000 vehicles into Australia between 2011 and 2015.

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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.

The carmaker already settled a separate Australian class action in September for between $87m and $129m, and said in a release it was considering an appeal of the fresh $125m penalty.

“Volkswagen AG firmly believes that the penalty of $75m agreed in principle with the Australian Competition and Consumer Commission to resolve the regulatory proceedings was a fair amount and is carefully reviewing the court’s reasons for deviating from that amount,” the company said.

Federal court justice Lindsay Foster in October said the initial $75m fine and $4m in court costs negotiated between Volkswagen and the ACCC was “outrageous” and should be “multiples of that amount” considering the scale of wrongdoing.

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Media reported at the time that Justice Foster described the deal as “not a lot of money for Volkswagen”, while he also appeared to criticise the ACCC for not pushing hard enough.

On Friday, ACCC chair Rod Sims said Volkswagen AG’s conduct had been blatant and deliberate but he made no mention of the previous $75m agreement with the company.

The watchdog pointed out that the previous highest penalties of $10m for Coles, Ford and Telstra were recently overtaken by penalties of $12m against We Buy Houses and then penalties of $26m ordered against vocational training provider Empower Institute.

The $125m fine comes as Australia’s corporate regulator begins civil proceedings in the federal court against a unit of Volkswagen AG for allegedly not making appropriate checks before giving out 49,380 loans to consumers.

The Australian Securities and Investments Commission has alleged that Volkswagen Financial Services Australia did not make required inquiries into borrowers’ living expenses or if the loans were unsuitable for them.