Volkswagen settles emissions-cheating cases for $14.7B
DETROIT (AP) — Volkswagen will spend $14.7 billion to settle consumer lawsuits and government allegations that it cheated on emissions tests in what lawyers are calling the largest auto-related class-action settlement in U.S. history.
Under the settlement revealed Tuesday by a U.S. District Court in San Francisco, VW will pay just over $10 billion to either buy back or repair about 475,000 vehicles with cheating 2-liter diesel engines. The money also will compensate owners who will get from $5,100 to $10,000 depending on the age of their vehicles.
The German automaker also has to pay governments $2.7 billion for environmental mitigation and spend another $2 billion for research on zero-emissions vehicles.
Volkswagen has admitted that the 2-liter diesels were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Lawyers are still working on settlements for another 80,000 vehicles with 3-liter diesel engines. The company got away with the scheme for seven years.
As part of the settlement, VW must offer to buy back most of the affected cars, or terminate their leases. That’s because, according to court documents filed Tuesday, there currently is no repair that can bring the cars into compliance with U.S. pollution regulations. If VW does propose a repair, it must be approved by the Environmental Protection Agency and the California Air Resources Board.
Owners who choose to have VW buy back their cars would get the clean trade-in value from before the scandal became public on Sept. 18, 2015. The average value of a VW diesel has dropped 19 percent since just before the scandal began. In August of 2015, the average was $13,196; this May it was $10,674, according to Kelley Blue Book.
If VW can come up with a repair that meets EPA and California standards, it’s likely to hurt the cars’ acceleration and fuel economy. Volkswagen marketed the cars as both more fuel efficient and better performing that those with regular gasoline engines.
The settlement still requires a judge’s approval before it can go into effect. Owners can choose to decline Volkswagen’s offer and sue the company on their own.
The company has to buy back or repair 85 percent of the vehicles or pay even more money into an environmental trust fund.
“This historic agreement holds Volkswagen accountable for its betrayal of consumer trust and requires Volkswagen to repair the environmental damage it caused,” said Elizabeth Cabraser, the lead attorney for consumers who sued the company.
Don Marron, a banker from Allentown, Pennsylvania, who owns a 2012 Jetta SportWagen diesel, said he’s glad Volkswagen is offering more compensation than earlier reports had suggested. But Marron wants assurance that if Volkswagen fixes his car but he doesn’t like the way it performs, the company will still buy it back. And if he keeps his car and saves Volkswagen money, he wants compensation for doing that.
“At this moment, I don’t know anything more than I did a couple of months ago,” he said.