A decade after Volkswagen’s emissions scandal, the fallout is reigniting across Europe. In London, major carmakers including Mercedes-Benz, Ford, and Renault are defending a mass diesel-emissions lawsuit brought by more than 1.6 million motorists. Meanwhile, in Germany, a court’s shock annulment of Volkswagen’s €270 million D&O insurance settlement has unsettled the liability market and reignited questions about disclosure, governance, and insurer exposure.
In London, lawyers representing more than 1.6 million claimants have accused leading carmakers of manipulating diesel emissions results, asserting that the companies “would rather cheat than comply with the law,” according to remarks reported by Reuters.
The case - among the largest collective actions ever brought before the High Court - targets Mercedes-Benz, Ford, Nissan, Renault, and Stellantis-owned marques Peugeot and Citroën. It centres on diesel vehicles sold between 2012 and 2017 that allegedly used unlawful “defeat devices” designed to recognise official testing conditions and artificially suppress nitrogen oxide (NOx) levels.
Claimants argue that, once on the road, the same vehicles emitted NOx at levels as much as 12 times higher than those recorded during testing, damaging public health and the environment. The lawsuit seeks compensation for owners across the UK and could set a precedent for similar claims pending against other manufacturers.
The five automakers reject any wrongdoing and insist the claims are “fundamentally flawed”. They maintain that their emissions systems were calibrated for legitimate engineering or safety reasons. Renault’s lawyer Alexander Antelme said in filings that the case rests on the “false assumption that the features of ‘VW dieselgate’ applied across the entire automotive industry.”
The court will first assess a 20-vehicle sample to determine whether any contained prohibited defeat devices. A second trial will then decide potential damages, with a final ruling expected in 2026.
Volkswagen, which admitted in 2015 to using similar devices, has already paid more than €32 billion (AU$52 billion) in fines, refits, and legal settlements. The company settled UK claims in 2022 without admitting liability, but the scandal continues to cast what manufacturers have described as a “long shadow” over the sector.
Counsel for the claimants, Tom de la Mare, argued that the emissions crisis reflected a broader corporate mindset in which automakers made “a conscious decision” to prioritise convenience and performance over compliance.
The case underscores how regulatory risk and litigation exposure continue to reshape the cost of doing business for global manufacturers - and by extension, their insurers.
While carmakers defend their reputations in London, insurers are grappling with fresh uncertainty in Germany. The Federal Court of Justice in Karlsruhe last month overturned shareholder approval for Volkswagen’s 2021 settlement with former executives and their directors’ and officers’ (D&O) insurers.
The agreement had required ex-chief executive Martin Winterkorn and former Audi head Rupert Stadler to pay €11.2 million and €4.1 million respectively, with insurers contributing an additional €270 million. According to the Financial Times, the court ruled that shareholders had been deprived of crucial information, citing a “transparency deficit” over the executives’ personal assets and the release of other managers from liability.
The case now returns to a lower court, where shareholder groups are challenging whether the settlement adequately reflected Volkswagen’s multibillion-euro exposure since Dieselgate.
Volkswagen maintains that “the reasons for the agreement remain valid” and has pledged to pursue an equivalent settlement “through a different legal framework.”
For the D&O insurance market, the annulment represents a cautionary tale about disclosure and governance. The disputed payout - one of Germany’s largest of its kind - was led by Zurich and supported by AXA XL, Allianz Global Corporate & Specialty, and several Lloyd’s syndicates.
The judgment raises the prospect that large insurance-backed settlements could be unravelled years later if shareholder transparency is found lacking. For underwriters and brokers, it signals heightened governance scrutiny and the need to stress-test D&O policies for exposures that extend beyond initial claims.
Nine years after the Dieselgate revelations, the legal and insurance consequences show little sign of abating. The overlapping UK and German proceedings illustrate how environmental misconduct can morph into complex, multi-jurisdictional disputes - with risk carriers, as much as manufacturers, left managing the exhaust.
