IT'S OFFICIAL: VW Will Spend $14.7 Billion to Settle U.S. Diesel Cheating
After months and months of waiting, owners and lessors of cars implicated in Volkswagen's emissions-cheating scandal are finally inching closer to being financially compensated. Per a July, 26 Reuters report, U.S. District Judge Charles Breyer gave preliminary approval for VW's $10 billion plan for buybacks. VW's buyback plan is part of a $14.7 billion settlement with the U.S. government, the details of which appear below.
With preliminary approval granted, Volkswagen will soon be able to establish a website where affected owners are able to determine how much compensation they're entitled to. If an owner opts for a buyback, VW will pay out $5100 plus the value of the car before news of the emissions scandal became public.
Judge Breyer set October 15th as the date for the final approval.
This story has been updated to reflect U.S. District Judge Charles Breyer's preliminary approval of Volkswagen's settlement. The original report on the details of the settlement appears below.
The estimated cost of Volkswagen's U.S. diesel emissions cheating just rose by half-to nearly $15 billion, the largest settlement ever paid by an automaker.
Last week, we reported that Volkswagen's buybacks, customer make-good payments, and federal and state fines could add up to a $10 billion price tag. Today, the U.S. Environmental Protection Agency announced that the automaker will spend up to $14.7 billion to settle claims related to its emissions-cheating TDI diesel engines.
Roughly $10 billion of the settlement money will go to the nearly 475,000 U.S. owners of 2.0-liter TDI-powered vehicles-model-year 2009 through 2015 Jettas, Passats, Golfs and Beetles, as well as the TDI-powered Audi A3.
According to the EPA:
The settlements require Volkswagen to offer owners of any affected vehicle the option to have the company buy back the car and to offer lessees a lease cancellation at no cost. Volkswagen may also propose an emissions modification plan to EPA and CARB, and if approved, may also offer owners and lessees the option of having their vehicles modified to substantially reduce emissions in lieu of a buyback. Under the U.S./California settlement, Volkswagen must achieve an overall recall rate of at least 85% of affected 2.0 liter vehicles under these programs or pay additional sums into the mitigation trust fund. The FTC order requires Volkswagen to compensate consumers who elect either of these options.
Buyback values will be determined by the market value of the affected vehicle as of September 2015, prior to Volkswagen's public disclosure of the widespread emissions cheating. Owners who choose to sell their cars back to Volkswagen will receive between $12,500 and $44,000, depending on vehicle condition and mileage. The Federal Trade Commission is also requiring VW to pay off the loans of owners who owe more than their affected TDI vehicle is worth, up to 130 percent of the buyback value of the car. Those who leased their affected TDI vehicles are eligible for a no-cost lease termination.
The settlement also allows Volkswagen to apply to EPA and the California Air Resource Board for approval of a fix to make affected vehicles emissions-compliant in real-world driving conditions. If approved, the automaker will offer consumers the option of keeping their cars and having them fixed. Per FTC regulation, owners who choose to have their cars fixed will receive compensation money from VW to make up for the automaker's deceptive advertising calling TDI vehicles "really clean."
Former TDI owners who sold their vehicles after the defeat device was made public may be eligible for partial compensation, split between them and the people who bought their cars.
For full consumer information, affected owners can visit VWCourtSettlement.com or AudiCourtSettlement.com, where they can determine their eligibility, make claims, set up appointments at local VW or Audi dealerships, and receive updates. The EPA states that consumer payments will be made available after the settlement is approved by the court, with money being handed out potentially as early as October 2016.
The settlement is due to be filed by noon on June 28th in the U.S. District Court for the Northern District of California, located in San Francisco.
Under the Clean Air Act, Volkswagen will also pay $2.7 billion to fund NOx emissions reduction programs, focusing on areas where the emissions-cheating TDI vehicles were most prevalent. The automaker will also pay an additional $2 billion toward improving infrastructure, access and education pertaining to zero-emissions vehicles, with $1.2 billion going to a national EPA-approved investment plan and $800 million to a California-specific program approved by CARB.
"By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our atmosphere," said Deputy Attorney General Sally Q. Yates. "This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public's trust. And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go."
"Today's announcement shows the high cost of violating our consumer protection and environmental laws," said FTC Chairwoman Edith Ramirez. "Just as importantly, consumers who were cheated by Volkswagen's deceptive advertising campaign will be able to get full and fair compensation, not only for the lost or diminished value of their car but also for the other harms that VW caused them."
The automaker still has not reached a deal with regulators pertaining to 3.0-liter TDI-powered vehicles. It also must contend with a criminal investigation from the U.S. Department of Justice, a lawsuit over false advertising filed by the Federal Trade Commission, and investigations from attorneys general in 42 states, the District of Columbia, and Puerto Rico, the New York Times reports. And, of course, the automaker faces similar legal action in Europe and elsewhere.
A fix to make affected TDI vehicles emissions-compliant still has not been approved by regulators.
This post was originally published on June 27th, and is being continually updated as official information is made public. The last update was made on July 26th at 2:52 p.m. ET.
