Diesel own­ers get buy­back op­tion

The Volk­swa­gen deal in­volves 80,000 ve­hi­cles.

The Denver Post - - BUSINESS - By Sud­hin Thanawala and Tom Krisher

Volk­swa­gen reached a deal that will give at least some own­ers of the re­main­ing 80,000 diesel ve­hi­cles caught in the com­pany’s emis­sions cheat­ing scan­dal the op­tion of a buy­back and pro­vide com­pen­sa­tion to all of them on top of any re­pur­chase or re­pairs, U.S. reg­u­la­tors and a fed­eral judge said Tues­day.

The $1 bil­lion set­tle­ment with the U.S. En­vi­ron­men­tal Pro­tec­tion Agency will give own­ers of 20,000 3-liter diesel cars the choice of a buy­back. The fig­ure does not in­clude ad­di­tional pay­ments to own­ers.

Volk­swa­gen be­lieves it can bring the other 60,000 ve­hi­cles into com­pli­ance with pol­lu­tion reg­u­la­tions and will not of­fer a buy­back if that’s the case, U.S. District Judge Charles Breyer said in San Francisco.

The deal in­cludes $225 mil­lion the Ger­man au­tomaker will con­trib­ute to an en­vi­ron­men­tal fund to off­set the cars’ ex­cess pol­lu­tion, Cyn­thia Giles of the EPA said in a con­fer­ence call with re­porters.

Ad­di­tional com­pen­sa­tion for car own­ers will be sub­stan­tial, ac­cord­ing to the judge, but he did not pro­vide a fig­ure and said the sides still had more work to do.

“I am op­ti­mistic the par­ties will re­solve the re­main­ing is­sues,” Breyer said, with­out elab­o­rat­ing on what was left to be done.

The set­tle­ment was a ma­jor step to­ward rec­ti­fy­ing law­suits stem­ming from the global scan­dal that erupted last year, dam­ag­ing Volk­swa­gen’s rep­u­ta­tion and hurt­ing its sales. The com­pany pre­vi­ously reached a nearly $15 bil­lion deal for the 475,000 2-liter diesel cars also pro­grammed to cheat on emis­sions tests.

Hin­rich J. Woe­bcken, pres­i­dent and CEO of Volk­swa­gen Group of Amer­ica Inc., said the agree­ment an­nounced Tues­day was part of Volk­swa­gen’s “ef­forts to make things right” for its cus­tomers.

“We are com­mit­ted to earn­ing back the trust of all our stake­hold­ers and thank our cus­tomers and deal­ers in the United States for their pa­tience as the process moves for­ward,” he said in a state­ment.

The deal pro­tects the en­vi­ron­ment “by re­mov­ing the cars from road and by off­set­ting harm­ful emis­sions that re­sulted from their cheat­ing,” said Giles.

The new set­tle­ment ap­pears to mir­ror the terms for the cars with smaller en­gines.

The pre­vi­ous deal gives 2liter own­ers the op­tion to have the au­tomaker buy back their ve­hi­cle re­gard­less of its con­di­tion for the full trade-in price on Sept. 18, 2015, when the scan­dal broke, or pay for re­pairs.

Volk­swa­gen also will pay those own­ers $5,100 to $10,000 each, de­pend­ing on the age of the car and whether the owner had it prior to Sept. 18 of last year.

The com­pany has agreed to spend up to $10 bil­lion com­pen­sat­ing those con­sumers. That set­tle­ment also in­cludes $2.7 bil­lion for un­spec­i­fied en­vi­ron­men­tal mit­i­ga­tion and $2 bil­lion to pro­mote zero-emis­sions ve­hi­cles. The set­tle­ments emerged out of law­suits from car own­ers and the U.S. Depart­ment of Jus­tice af­ter the EPA said Volk­swa­gen had fit­ted many of its cars with soft­ware to fool emis­sions tests.

The soft­ware rec­og­nized 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 up to 40 times the al­low­able limit of ni­tro­gen ox­ide, which can cause res­pi­ra­tory prob­lems in hu­mans.

The com­pany has reached a sep­a­rate $1.2 bil­lion deal with its U.S. deal­ers and is still fac­ing po­ten­tially bil­lions more in fines and penal­ties and pos­si­ble crim­i­nal charges.


The $1 bil­lion set­tle­ment with the EPA gives own­ers of 20,000 3-liter diesel cars the choice of a buy­back.

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