US judge okays $14.7-bn settlement over VW diesel vehicles

CARMAKER TO SPEND $10.033 BN ON BUYBACKS

A US federal judge on Tuesday approved Volkswagen AG’S record-setting $14.7 billion settlement with regulators and owners of 475,000 polluting diesel vehicles, and the German automaker said it would begin buying back the vehicles in mid-november.

The action by US District Judge Charles Breyer in San Francisco marked the latest development in a scandal that has rocked VW since it admitted in September 2015 using secret software in its diesel cars to cheat exhaust emissions tests and make them appear cleaner than they really were.

Under the settlement first announced in June, Volkswagen agreed to spend up to $10.033 billion on the buybacks and owner compensation and $4.7 billion on programmes to offset excess emissions and boost zero-emission vehicle infrastructure and other clean vehicle projects.

The affected vehicles emit up to 40 times legally allowable pollution levels. Volkswagen may also be allowed to repair vehicles if regulators approve fixes.

It represented the largest civil settlement worldwide ever reached with an automaker over allegations of misconduct and fraud toward vehicle owners.

In total, Volkswagen has agreed to date to spend up to $16.5 billion in connection with the diesel emissions scandal, including payments to dealers, states and attorneys for owners. The scandal rattled VW’S global business, harmed its reputation and prompted the ouster of its CEO.

The world’s second-largest automaker still faces billions more in costs to address 85,000 polluting 3.0 liter vehicles and US Justice Department fines for violating clean air laws. It also faces lawsuits from at least 16 US states for additional claims that could hike the company’s overall costs.

Breyer turned away objections from owners who thought the settlement did not provide enough money, saying the agreement “adequately and fairly compensates” owners. In addition to the pre-scandal “trade in” value of the vehicle, owners will also receive $5,100 to $10,000 in additional compensation. “Given the risks of prolonged litigation, the immediate settlement of this matter is far preferable,” Breyer wrote.

Volkswagen agreed to make up to $1.21 billion in payments to 652 US VW brand dealers and $600 million to 44 US states to address some state claims.

To date, nearly 340,000 owners have registered to take part in the settlement, and only about 3,500 owners have opted out. Volkswagen must fix or buy back 85 per cent of the 475,000 vehicles under the agreement within two years or face additional costs.

Affected vehicles emit up to 40 times legally allowable pollution levels. VW may also be allowed to repair vehicles if regulators approve fixes