Volkswagen will pay $14.7 billion to settle claims over its diesel cars with 2-liter diesel engines, including plans for buybacks and payments up to $10,000 for each vehicle to owners, in what would be one of the largest consumer class-action settlements ever in the United States.
The proposed settlement involving the federal government and lawyers for the owners of about 475,000 Volkswagen vehicles, includes a maximum of $10.03 billion to buy back affected cars at their pre-scandal values, and additional cash compensation for the owners, according to two people briefed on the settlement’s terms.
Owners will receive $5,100 to $10,000 in compensation and can either have their cars fixed or bought back to be repaired to bring them in compliance, it was reported. If owners elect to have their cars bought back, their value would be set to last September when the scandal broke. The date is important because the vehicles have lost value due to the scandal.
Particularly attractive is the combination of the buyback offer and cash payment, which appears to be the better option for consumers, Mr. Uhlmann said.
“It’s hard to see why consumers would want to take advantage of the fix and not the buyback option, unless they just love their cars,” he said. “For Volkswagen, it’s an extremely expensive settlement, far more than many analysts predicted.”
Volkswagen would also pay $2.7 billion into an E.P.A. fund, the two people said, to compensate for the environmental impact of its cars, which were fitted with software that enabled them to pass emissions tests but exceed legal pollution limits in on-the-road driving. Volkswagen has also agreed to spend $2 billion on new cleaner-vehicle projects, an investment that the automaker could reap returns on.
In the case of 2-liter engines, VW inserted software into their pollution control systems that detected when they were being tested. On the test equipment, the cars were in compliance. On the highway, they spewed up to 40 times the pollutants allowed. Besides regulators, customers were left in the dark as well. The vehicles were sold as “clean diesels.”
Volkswagen hasn’t released details of its internal investigation that would pinpoint individuals behind the deception.