Judge approved VW's $14.7 billion settlement with regulators and owners diesel vehicles

Article by Christian A., on October 31, 2016

Owners of Volkswagen Group vehicles affected by the so-called “Dieselgate” – involving its 2.0-liter TDI engine in particular – would soon have a peace of mind after Judge Charles R. Breyer of the United States District Court for the Northern District of California granted final approval to an agreement that would settle the differences between the carmaker and private plaintiffs.

In April this year, Volkswagen AG, Volkswagen Group of America, Inc. and certain affiliates entered into an agreement with the US Department of Justice (DOJ) and regulatory agencies to compensate customers whose vehicles were affected by the diesel emissions cheating scandal heavily publicized in 2015. This agreement meant that owners could opt for either a buyback or a modification subject to government approval. In addition, customers whose VW cars are leased are given the opportunity to cancel the lease and returning the vehicle to the carmaker.

Around 500,000 cars powered by a 2.0-liter diesel engine in the US are affected. Judge Breyer has said that car owners are entitled to a substantial compensation from Volkswagen. Meanwhile, no compensation agreement has yet been finalized for the 100,000 cars equipped with the 3.0-liter diesel engine. It was late 2015 when VW was found out to have been employing software that helps it evade emissions testing process and make its diesel engines seem cleaner than they actually are.

Aside from approving the settlement agreement, Judge Breyer also approved a Consent Decree between Volkswagen and the US Department of Justice on behalf of the Environmental Protection Agency (EPA) and the State of California. He also approved a Consent Order between Volkswagen and the US Federal Trade Commission.

Hinrich J. Woebcken, president and chief executive of Volkswagen Group of America, remarked that the carmaker considers the final approval of the 2.0L TDI settlement as an important milestone in the company’s target to make things right in the US. He added that as part of Volkswagen’s commitment to ensure that the program is carried out smoothly, the carmaker has devoted significant resources and personnel to this end.

The settlement is expected to cost Volkswagen around $14.7 billion, of which around $10.33 billion will be used to buy back affected vehicle as early as mid-November. Volkswagen has tapped around 900 new employees to handle the buyback program. Volkswagen will also spend $4.7 billion to finance programs designed to offset the excess emissions as well as to develop zero-emissions vehicles. However, this settlement excludes nearly 85,000 3.0-liter V6 diesel vehicles sold in the US. VW is still working to reach a settlement agreement with owners of affected 3.0-liter TDI V6 diesel vehicles.

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