What VW Should Do for Its Diesel Owners
Since the Volkswagen emissions scandal broke last September, Consumer Reports has called for the carmaker to make owners whole and pay penalties for its deception.
By June 28, the carmaker must give the U.S. District Court in San Francisco a proposed final settlement regarding its deliberate cheating of Environmental Protection Agency emissions regulations with 600,000 diesel vehicles. This settlement—between VW, several government agencies, and car owners represented in class-action lawsuits against the company—will be released for public comment then.
In advance of Tuesday's announcement, the Associated Press reported on June 23 that sources briefed on the terms of the civil settlement revealed it will cost VW about $10.2 billion. Volkswagen would use most of that money to buy back the offending vehicles at their pre-scandal value, or to fix the polluting 2.0-liter cars. In addition, consumers will also reportedly receive between $1,000 and $7,000 depending on the cars’ age. The AP said those terms were still under review and could change by June 28. The Wall Street Journal reported that the deal also could include $4 billion to cover the environmental effects and to promote zero-emission cars.
While these reports are promising, there is much we still don't know—including which cars will be eligible for buybacks and what restrictions might be on the money given to VW owners—so it is still too soon to be certain whether consumers and the environment will be fully and appropriately compensated. Consumer Reports looks forward to reviewing the settlement's terms to make sure that's the case.
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How to Hold VW Accountable
In preparation for the settlement, Consumer Reports and the U.S. Public Interest Research Group have called on VW to make reparations for the damage its cars have caused to consumers and the environment. Here is a checklist compiled by the policy and mobilization arm of Consumer Reports based on criteria it helped develop along with U.S. PIRG and four other public interest advocates:
1. Make consumers whole by offering to fix or buy back their affected cars
All owners should have the option of a buyback where they receive at least the full current value of the car, plus compensation for any lost value attributable to VW’s deceit.
While all owners should be able to choose a buyback, those with cars that can be fixed to meet emission standards should also have the option to have them fixed.
However, simply fixing the cars might leave customers less than whole, because their cars’ resale values may fall. Whether a full or partial fix is available, Consumer Reports' preliminary tests show the cars could get lower gas mileage and have weaker performance than promised and advertised. If so, resale values will likely fall. VW should provide appropriate incentives for owners to take the time and trouble to get their cars fixed or bought back.
Any buyback of a VW or Audi vehicle should not require VW owners to purchase or lease another Volkswagen Group vehicle. Too many of these corporate settlements are merely ways to turn over repeat business, using the settlement as a de facto marketing and incentives fund. If VW owners feel burned and want to turn in their cars, they should not have to patronize the brand again.
2. Mitigate past, ongoing, and future emissions
Repaired emissions control systems must be engineered to keep emissions below current federal standards well into the future.
Volkswagen should offset its past and ongoing emission violations. The future emission violations of cars that are not fixed or only partially fixed should also be calculated and offset.
3. Assess large civil penalties.
The Clean Air Act sets a maximum penalty of $37,500 per car, or more than $18 billion in total penalties. A large civil penalty will send a strong deterrent message to others not to violate the law. While it is unlikely that the maximum penalty will be assessed, we do not want VW to be able to merely write off the expense so that it is borne by taxpayers—as happened with BP’s $20.8 billion Deepwater Horizon fine.
4. Set up Supplemental Environmental Projects (SEPs)
In addition to offsetting the emissions attributable to the defeat devices, VW should set up Supplemental Environmental Projects to offset a portion of the civil penalties while achieving concrete pollution reductions. The SEP should direct a substantial amount of funds, perhaps calculated on a per-car basis, to implement projects to reduce pollution from on-road vehicles and increase deployment of zero-emission electric vehicles. The SEP should be above and beyond other penalties and remedies paid by VW.
5. Criminal Prosecution
While it may be part of the settlement filed by June 28, it is also important for the government to criminally charge responsible executives and hold VW criminally accountable for its lawbreaking. Complete justice includes the full array of criminal monetary penalties and other remedies available under the law against the firm, not only to punish it but also to deter similar misconduct by others.
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