Audi Settles Class Action Claims for Allegedly Defective Transmission

Car manufacturers provide warranties for their vehicles, promising to pay for most repairs and replacements that the vehicle requires within a certain number of years of purchase of the car or up to a certain mileage. However, if enough cars experience failures of a particular variety after the warranty expires, the manufacturer could still find themselves in trouble.

Audi has found itself in that situation when a class-action lawsuit was filed against it on behalf of U.S.A. consumers who leased or bought a 2002-6 A4 or A6 model with a continuously variable transmission (CVT). The lawsuit, which was filed in January 2011, alleges that the CVTs had manufacturing and design flaws that caused them to fail and left owners with thousands of dollars in repair bills. The lawsuit also alleges that Audi knew about these flaws and intentionally concealed them from consumers.

In the preliminarily approved settlement, Audi denied the allegation that the CVTs were defective and insisted that it had “acted properly and in compliance with applicable laws and rules.” However, they also said that the expense of extended litigation “may not be in the best interests of their consumers.” Hence Audi’s settlement offer.

The settlement includes reimbursement “for certain C.V.T. transmission repairs” that occurred or will occur within 10 years or 100,000 miles of the original sale or lease of the vehicle. The original warranty covered only four years or 50,000 miles. The owners will be reimbursed for the replacement of various parts, depending on which model year they had.
The transmission control module is covered for 2003, 2004, 2005 and 2006 model year A4s and A6s. The valve body is covered for 2003-4 model A4 and A6. Replacement of the transmission without the valve body and transmission control module “is covered for the 2002, 2003, or 2004 model year Audi A4 or A6.” The settlement does not say whether it includes reimbursement of another transmission part or replacement of the entire transmission.

Some of the 2002 and 2003 models are probably beyond even the extended warranty by now, but the settlement will still reimburse the owners if the specified repair occurred within 100,000 miles or 10 years. The settlement further provides a “trade-in reimbursement cost” to make up for lost value of a 2002, 2003, or 2004 A4 or A6 that needed “a complete replacement of a C.V.T. transmission” after the normal warranty expired but the vehicle was sold or traded without repair.

The settlement does not specify whether owners in that group who had a major component fail, but did not need to replace the entire transmission, are eligible for reimbursement. It also did not indicate why the 2005-6 model year was not included in this part of the settlement.
The settlement, which covers about 64,000 Audi vehicles, was preliminarily approved on March 11 by Judge A. Howard Matz of the United States District Court for the Central District of California. The hearing for final approval has been scheduled for September.

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