German automaker Volkswagen AG will start buying back its polluting cars starting mid-November this year as a US judge recently approved a US$14.7 billion deal arising from the company’s diesel emissions cheating scandal.
US District Judge Charles Breyer in San Francisco signed off on VW’s settlement, which is one of the biggest corporate settlements on record, with federal and California regulators and the owners of the 475,000 polluting diesel vehicles in a pivotal moment for the world’s No. 2 automaker as it tries to move past a scandal that has overshadowed it for more than a year.
The company admitted in September 2015 to installing secret software in its diesel cars to cheat exhaust emissions tests and make them appear cleaner in testing than they really were. In reality, the vehicles could have emitted up to 40 times the legally allowable pollution levels, regulators said.
Owners will get the pre-scandal “trade in” value of the vehicle and US$5,100 to US$10,000 in additional compensation.Volkswagen agreed to spend up to US$10.033 billion on the buybacks and owner compensation and US$4.7 billion on programs to offset excess emissions and boost clean-vehicle projects.
Hinrich Woebcken, president and CEO of Volkswagen Group of America, pledged to carry out the terms “as seamlessly as possible.”
In total, Volkswagen has agreed to date to spend up to US$16.5 billion in connection with the scandal, including payments to dealers, states and attorneys for owners.
The settlement covers 2.0-litre polluting diesel Beetle, Golf, Jetta, Passat and Audi A3 cars from the 2009 through 2015 model years.
VW still faces billions more in costs to address 85,000 polluting 3.0-litre vehicles and 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.
Volkswagen has been in intensive talks over how much compensation it may offer owners of the larger 3.0-litre diesel Porsche, Audi and Volkswagen vehicles that emit up to nine times of the legally allowable emissions and whether it will offer buybacks for some of the polluting SUVs. No final agreement has been reached.
VW will provide US$2 billion over 10 years to fund programs to promote electric vehicle charging infrastructure, development of zero-emission ride-sharing fleets and other efforts to boost sales of cars that do not burn petroleum.
Volkswagen must fix or buy back 85% of the 475,000 vehicles under the agreement by June 2019 or face additional costs.
Nearly 340,000 owners have registered to take part in the settlement. About 3,500 owners have opted out. Owners have until September 2018 to submit paperwork to sell back vehicles. VW will have to destroy repurchased vehicles unless it wins approval for fixes.
The scandal rattled the company’s global business, harmed its reputation and prompted the ouster of its CEO Martin Winterkorn.