The Volkswagen Group has been accused of thumbing its nose at Australian customers by denying it has a case to answer in Australia over the diesel emissions scandal.

Key points: It's alleged VW, Audi, Skoda engaged in misleading and deceptive conduct in Australia

It's alleged VW, Audi, Skoda engaged in misleading and deceptive conduct in Australia In 2015 it was discovered many VW cars sold in US fitted with software designed to evade pollution controls

In 2015 it was discovered many VW cars sold in US fitted with software designed to evade pollution controls VW compensated customers in US and Canada, but in Australia the company insists it has no case to answer

Referring to multiple emails and letters, lawyers for the Australian Competition and Consumer Commission (ACCC) told the Federal Court that VW and its sister company Audi have previously admitted to both customers and regulators that their emissions-cheating software did not comply with Australian law.

However, VW is now arguing it has no case to answer in Australia, relying on the fact that approvals for the affected vehicles were obtained in Europe before they were exported to Australia.

It's been three years since it was revealed that VW fitted cars with "defeat devices" that could detect test conditions and reduce diesel emissions accordingly to improve results.

Australian motorists are suing VW and sister companies Skoda and Audi for misleading conduct, alleging that motorists have suffered financial loss due to the emissions scandal.

Volkswagen has compensated customers in Canada and the US, but the Australian wing of the company insists it has no case to answer here and has not offered compensation to Australian drivers.

The ACCC's barrister Jeremy Kirk SC told the court the German car giant had repeatedly acknowledged the defeat device was not compliant with Australian standards since 2015.

"Volkswagen says even if the overseas approval was obtained by falsehood and deception, that is tough luck for Australian consumers and tough luck under Australian law," Mr Kirk told the court.

Despite having pleaded guilty to criminal charges in the US and paying billions of dollars in compensation, Volkswagen told the court it never admitted the software installed to cheat emissions tests was a defeat device.

"I'm not saying anything about the United States — we say it's not relevant," VW Group's lawyer Noel Hutley SC told the judge.

In a surprising move, Volkswagen also decided not to call any witnesses for the first half of the case, which the court was told would make proceedings difficult.

Lawyers for the ACCC said the court should be wary of any departure from Volkswagen's plea of guilty in the US criminal case.

Referring to further correspondence dating back to 2015, the court was told the Volkswagen Group had also previously stated the software was "manipulative, unlawful, and a moral disaster", and the company had breached the trust of its customers.

'Day of reckoning' for car companies

Outside court, one of the lead plaintiffs in the class action, Robyn Richardson, said the carmakers were "liars" and the legal action would expose them.

Robyn Richardson said Australian consumers were not fools. ( ABC News: Rebecca Armitage )

"This is the day the rubber hits the road for Volkswagen, for Audi and for Skoda, where they will be exposed, where they will be held to account for one of the gravest of environmental and consumer wrongs that we have experienced, not just in this country, but globally," she said.

"It's today, it's that day of reckoning, and I'm excited that we're finally here.

"What was involved to engineer those vehicles in the way they've been engineered is utterly extraordinary.

"I think for me today, that's what I'm looking forward to. What did you do? How did you do it? Who was involved? Well, we're going to have a look behind the veil.

"We are not fools in Australia, the Australian consumers are not fools, and don't treat us like fools."

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'It's about right and wrong. It's about deceit'

"This isn't about compensation," VW lead claimant Alister Dalton said. ( ABC News: Rebecca Armitage )

Alistair Dalton was a diehard VW driver but is now taking on the carmaker as another of the lead Australian claimants.

His first car was an old Volkswagen Beetle, and he upgraded to a VW Passat and a Golf in 2011.

"We bought them based on reliability, based on respect for the brand, and also the fact that the vehicles were an efficient mode of transport," he said.

"We were led to believe they were going to be better for the environment at the time."

Mr Dalton said he was not motivated by money, and had no qualms about taking on a multi-billion-dollar global company.

"It's about right and wrong. It's about deceit. I bought a product of a certain value, that I was told it does something, and now I know it doesn't do that," he said.

"It's not David versus Goliath. There are lots of Davids. I think all the facts will speak for themselves."

Will Australian motorists get answers?

Law firm Maurice Blackburn alleges as many as 100,000 VW, Audi and Skoda owners have suffered a financial loss.

They argue the car companies misled customers by selling affected diesel vehicles as environmentally friendly cars, knowing the defeat devices altered the emission test results.

Put simply, it's argued customers paid for something they never got.

It is also argued the cars, powered by EA189 1.6- or 2.0-litre diesel engines, wouldn't have been registered in Australia had the true emissions of the vehicles been known.

The ACCC further alleges the installation of the defeat devices in VW and Audi vehicles affects the performance, fuel economy, durability of parts, while also increasing noise and vibrations.

The legal case has been split in two and the first stage, commencing today, will concentrate on a point of law.

The second half of the case is scheduled to run in September 2019 and will concentrate on why the defeat device was used, and whether the device and the subsequent fix affects performance.

So far, 18,000 motorists have signed up to the legal action — but all owners of affected models would benefit if the case was successful, apart from a few thousand people who opted out of the case.

Volkswagen has paid $24 billion in damages, fines and compensation to US motorists affected by the diesel-emission scandal, along with a further $2.4 billion payout in Canada.