$14.7-Billion Auto-Scandal Settlement Largest in U.S. History
Volkswagen diesel owners who have been anxiously waiting word on when they’ll receive buyouts or cash settlements from the German automaker can breathe a sigh of relief. A federal judge just approved a $14.7-billion settlement in the Volkswagen emissions-cheating case. This marks the largest settlement involving auto scandals in U.S. history.
Owners of the 475,000 Volkswagen and Audi vehicles with 2.0-liter diesel engines can either have Volkswagen buy back their vehicles or have them modified and receive additional compensation from Volkswagen. The company will spend up to $10.033 billion in buybacks and cash compensation.
Volkswagen also agreed to spend $4.7 billion for programs to offset excess emissions and support clean-vehicle projects. This breaks out into $2.7 billion in a trust to support environmental programs and cut down on emissions and $2.0 billion to promote zero-emissions vehicles over a 10-year period.
Nearly 340,000 owners have registered to take part in the settlement, while only about 3,500 have opted out. Under the terms of the settlement agreement, Volkswagen must either buy back or fix 85 percent of the 2.0-liter vehicles by June 30, 2019 or face additional costs.
The buyback claims process has already begun and the first transactions are expected in mid-November. Volkswagen said it has hired 900 people to handle the buybacks, which includes one person that will be on-premises at each dealership.
This is just the first buyback and involves only 2.0-liter diesel engines in VW vehicles. Legal proceedings for the 85,000 VW vehicles in the U.S. with 3.0-liter diesel engines are ongoing. The automaker still faces fines from the Justice Department for violating the Clean Air Act and lawsuits in at least 16 states.
Some of the major events since Volkswagen admitted to cheating on emissions a year ago:
- Volkswagen was forced to stop selling diesel-powered vehicles in the U.S.
- The company’s Chief Executive Martin Winterkorn was forced to resign and replaced by Matthias Muller, former head of VW’s Porsche division.
- In September, Volkswagen agreed to pay up to $1.2 billion to compensate its U.S. dealers for losses they suffered because of the emissions-cheating scandal. A judge still must approve this settlement, which would provide dealers with about $1.85 million each. Dealers could still opt out and pursue their own litigation against the company.
- Sales of VW vehicles plummeted as the company’s reputation suffered. Through September 2016, Volkswagen sales in the U.S. were $231,300, down 12.5 percent over the same period last year when sales were $264,200.
- Combined sales of all the automaker’s brands (VW, Audi and Porsche) were down 6.1 percent in the January-September 2016 period, totaling 426,000 vehicles.
Volkswagen hopes its introduction of new models in the U.S. will aid its comeback. First up is the midsize sport utility vehicle Atlas, which is expected to be available in spring 2017 with a starting price of about $30,000.