Volkswagen and Champion Motors Ordered to Pay 5.6 Million Shekels Over Gear Selector Defect

A district court in central Israel ruled in a class-action lawsuit that Champion Motors and Volkswagen must compensate consumers approximately 5.6 million shekels for repairs related to a known defect in the gear selector mechanism of certain Volkswagen Group vehicles. The ruling followed claims that the companies failed to notify buyers or cover repair costs despite awareness of a recurring fault affecting Volkswagen, Seat, Skoda, and Audi models produced between 2015 and 2019.

The defect involves the micro switch in the gear selector assembly, which can malfunction due to silica buildup, causing the ignition key to be removable while the car is still in drive mode (D) instead of park (P). This flaw risks the vehicle rolling away if the handbrake is not engaged, potentially leading to accidents or property damage. The court found that although the defect is not a classic safety recall issue, the manufacturers breached their duty of good faith by refusing to repair the known design fault after the warranty expired, forcing consumers to pay out of pocket.

Approximately 7,924 vehicles in Israel were repaired for this issue, with at least 500 owners paying hundreds to thousands of shekels for the fix. The court ordered full reimbursement of repair costs upon presentation of receipts, plus an additional 100 shekels for inconvenience. If receipts are unavailable, refunds will be based on owner declarations, capped at 2,400 shekels plus VAT for the gear selector and 800 shekels plus VAT for the micro switch.

Champion Motors and Volkswagen must notify all current and former owners of the affected vehicles within 30 days and facilitate the refund process. The court rejected claims that the defect was a natural wear issue or that it constituted a safety recall under Israeli regulations, noting that the responsibility to secure the vehicle rests with the driver. No evidence was presented of actual accidents caused by the defect. The plaintiffs will receive 30,000 shekels each, and their attorneys 400,000 shekels.

This ruling emphasizes manufacturers' obligations to disclose and remedy known defects even absent formal recalls, ensuring consumer protection against design flaws that impact vehicle operation and safety.