VW and Bosch to pay at least $1.6B to customers over Dieselgate scandal

Article by Christian A., on February 7, 2017

As the Dieselgate scandal continues its run, German carmaker Volkswagen AG and supplier Robert Bosch GmbH each reached a settlement agreement with owners of VW, Audi and Porsche diesel-powered vehicles found to be cheating emissions tests. The agreement, once approved, would entail a payment of at least $1.6 billion to accommodate specific actions – repair, buy back or compensation – meant to settle the companies’ differences with affected customers.

VW’s settlement agreement covers around 78,000 VW, Audi and Porsche vehicles powered by the group’s 3.0-liter TDI V6 diesel engine. This agreement became necessary because of the so-called Dieselgate scandal, which is basically a scheme implemented by VW to sell around 590,000 diesel-powered vehicles in the US – from model years 2009 to 2016 -- by making it seem that these units were cleaner than they actually were. Regulators have found out that VW employed a defeat device that helps these vehicles cheat on emissions tests.

Under the 3.0-liter TDI settlement program, Volkswagen would pay up to $1.2 billion in benefits assuming that 100 percent of affected customers take part; all eligible Generation 1 vehicles are bought back; and Generation 2 vehicles are fixed with an Emissions Compliant Repair to bring them to same emissions standards as they were certified.

The program would entail the buy back, trade-in, or lease termination of around 20,000 eligible Generation 1 vehicles -- 3.0L TDI V6-powered Volkswagen and Audi vehicles for model years 2009 through 2012. Likewise, the program would entail a recall and repair – without additional charges to the customer – around 58,000 Generation 2 vehicles, which are basically 3.0L TDI V6-powered VW, Audi and Porsche vehicles for model years 2013 through 2016.

VW expects to commence the program as early as May 2017, or as soon as the court gives its final approval.

On the other hand, Bosch agreement covers all VW Group vehicles powered by the carmaker’s 2.0-liter TDI engine (2009 to 2015 model years) and its 3.0-liter TDI V6 powerplant (2009 to 2016 model years). Vehicles owners tagged Bosch in the Dieselgate scandal since the company – regarded as the largest car-parts maker in world -- supplied control software for these diesel engines. Bosch was accused of helping design the so-called "defeat device" software that allowed affected TDI engines to cheat emissions tests.

Bosch’s financial damages from the Dieselgate, however, were substantially less than that of the VW Group. While VW Group has yet to set aside billions of dollars to settle the cases, Bosch only has to shell out around $327.5 million to compensate the owners of affected vehicles. Around $163.3 million will be spent to compensate owners of 2.0-liter TDI-powered VW Group vehicles while the remaining $113.3 million will be reserved for customers driving 3.0-liter TDI V6-powered VW Group vehicles.

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Topics: vw, bosch, dieselgate

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