VW to pay US $1.2B to U.S. owners

FRANKFURT • Volkswagen has agreed to pay at least US$1.2 billion in buybacks and compensation to settle claims from U.S. owners of cars with larger diesel engines that the company rigged to cheat on emissions tests.

And the German automaker could pay even more — as much as US$4 billion — if it can’t repair many of the cars in a way that satisfies regulators.

The proposed settlement filed late Tuesday before Judge Charles R. Breyer in U.S. District Court in San Francisco covers owners of some 78,000 Audi, Volkswagen and Porsche cars with 3.0-litre diesel engines.

Volkswagen has already agreed on a US$15 billion settlement with owners of some 500,000 smaller, 2.0-litre diesel engines.

Volkswagen has now settled most U.S. consumer claims as it tries to repair a tarnished reputation. “All of our customers with affected vehicles in the United States will have a resolution available to them,” Hinrich J. Woebcken, head of Volkswagen Group of America, said in a statement.

The company still faces lawsuits from fewer than 5,000 owners of 2.0-litre diesels who opted out of the settlement, as well as some shareholder suits and numerous lawsuits filed by states for violating pollution laws.

VW also has settled a U.S. criminal investigation by agreeing to pay US$4.3 billion, but a probe of employee behaviour continues with seven people charged in the U.S. In all, VW will pay more than US$20 billion to settle civil and criminal claims in the U.S. alone.

Also pending is whether VW can adequately fix some older 2.0-litre engines. If it can’t, VW will have to buy back all vehicles with the smaller diesel engines. A March 3 deadline is approaching. Legal issues also remain in Europe. Former CEO Martin Winterkorn and 36 others are under criminal investigation in Germany, where investors also are suing the company. Volkswagen shares plunged after the scandal broke in September of 2015.

Under Tuesday’s proposed settlement, owners of 20,000 older 3.0-litre models dating back to 20092012, which cannot be fixed to meet pollution standards, will be offered buybacks or trade-ins.

In addition, they will receive compensation ranging from US$7,755 to US$13,880, according to a statement from owners’ attorneys.

People who bought 58,000 newer cars from model years 2013-16, which can be fixed, will get compensation of US$7,039 to US$16,114. Volkswagen says those cars can be made to comply with pollution limits.

If VW can’t fix the newer cars to regulators’ satisfaction, then the owners’ attorneys will go back to court to seek buybacks.

VW’s proposed repair must win approval from U.S. environmental authorities by an agreed deadline. If not, buybacks could push the cost as high as the US$4.04 billion laid out in court documents.

The deal must still get court approval to take effect. Volkswagen said final approval would take at least until May.

Also Tuesday, parts supplier Robert Bosch GmbH agreed to pay US$327.5 million to settle claims from consumers and dealers regarding 2.0-litre and 3.0-litre engines, while not accepting it was at fault. Typical 2.0-litre owners will get US$350 in addition to what they get from VW, while 3.0-litre owners will get about US$1,500, said Elizabeth Cabraser, lead attorney for the owners. Bosch made the so-called “defeat device” that enabled the cheating.

Bosch CEO Volkmar Denner said the company settled so it could focus on its business

CUSTOMERS ... IN THE U.S. WILL HAVE A RESOLUTION AVAILABLE.