$ 21b US settlement deal for VW
Afederal judge has approved the largest auto- scandal settlement in United States history, giving nearly half a million American Volkswagen owners the choice between selling their cars back or having them repaired so they don’t cheat on emissions tests and discharge excess pollution.
US District Judge Charles Breyer this week said the nearly US$ 15 billion ($ 20.94b) deal “adequately and fairly” compensates consumers and gets the polluting vehicles off the road as soon as possible.
The German carmaker acknowledged last year that about 475,000 Volkswagens and Audis with two- litre, four- cylinder diesel engines were programmed to cheat on emissions tests.
The settlement calls for the company to spend up to US$ 10b to buy back or repair those vehicles’ engines and pay their owners an additional US$ 5100 to US$ 10,000 each. Volkswagen could start buying back the cars as early as next month. Regulators have not approved any fixes.
The settlement also includes US$ 2.7b for environmental mitigation and US$ 2b to promote zero- emissions vehicles.
“We’re going to sell it back as soon as humanly possible and try to put this behind us,” said Joe Azam, a 35- year- old New Yorker, who owns a 2014 Jetta wagon.
Azam said, however, he thought Volkswagen “got off easy” in terms of how much it was paying vehicle owners.
Blair Stewart, a 2012 Jetta wagon owner in Palo Alto, California, said Volkswagen should have paid owners the full purchase price of their vehicle, given the company’s fraud.
“This is not enough to deter the kind of behaviour they did.”
Breyer said in his order approving the settlement that affected car owners were not entitled to a full refund because many had “received a great deal of use out of their vehicles.” He also raised the spectre of bankruptcy for Volkswagen if it had to pay the full purchase price.
The scandal has damaged Volkswagen’s reputation and hurt its sales. The company is still facing potentially billions more in fines and penalties and possible criminal charges. It also will pay up to US$ 324 million in lawyers’ fees and $ 8.5m in out- of- pocket costs.
“Final approval of the 2.0L TDI settlement is an important milestone in our journey to making The pollution scandal has hit Volkswagen sales figures. things right in the United States,” Hinrich J. Woebcken, president and CEO of Volkswagen Group of America Inc. said in a statement. “Volkswagen is committed to ensuring that the programme is now carried out as seamlessly as possible for our affected customers and has devoted significant resources and personnel to making their experience a positive one.”
The lead lawyer for car owners, Elizabeth Cabraser, said in a statement that the deal “holds Volkswagen accountable for its illegal behaviour and breach of consumer trust”. More than 330,000 people have signed up for settlement benefits, with about 3200 opting out, she told the judge at a hearing last week.
The company said in April that it had set aside US$ 18.2b to cover the cost of the global scandal, which erupted in September 2015 when the US Environmental Protection Agency said Volkswagen had fitted many of its cars with software to fool emissions tests. Owners and the US Department of Justice sued.
The software recognised when the cars were being tested on a treadmill and turned on pollution controls. The controls were turned off when the cars returned to the road. The EPA alleged the scheme let the cars spew more than 40 times the allowable limit of nitrogen oxide, which can cause respiratory problems.