Financial Times

Volkswagen puts up fresh $1.2bn to end drivers’ emissions claims

by Patrick McGee, Financial Times

February 7, 2017 | 11:00 am
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N America bill for scandal heads towards $24bn; New payment for owners of biggest cars

Volkswagen moved to close the book on claims by US consumers hit by the vehicle maker’s diesel emissions scandal by agreeing to pay up to $1.2bn to the final big group of Americans seeking compensation for cars they purchased with test-cheating software.

The proposed settlement, covering owners of the biggest and most expensive cars affected, means the scandal’s cost to the German carmaker could reach $24.3bn in North America.

VW admitted in September 2015 to installing the illegal software in diesel cars in the US, allowing them to understate emissions of harmful nitrogen oxides in official tests while spewing excess NOx on the road.

Most of the affected cars had 2.0 litre engines, and VW last year finalised a $15.3bn settlement that offered to buy back these vehicles from the owners and pay them compensation.

VW is now proposing to compensate owners of 75,000 diesel vehicles powered by 3.0 litre engines, some made by the luxury Audi and Porsche brands, and buy back certain models.

“All of our customers with affected vehicles in the United States will have a resolution available to them,” said Hinrich Woebcken, head of VW in the US. “We will continue to work to earn back the trust of all our stakeholders.”

In a separate deal, Bosch, the German car-component supplier, whose software VW used in its emissions cheating, has agreed to pay $327.5m to resolve claims against it from owners and dealers. Bosch denied wrongdoing.

According to documents filed in a California court which must approve the VW settlement, the carmaker agreed to buy or fix about 20,000 VW Touareg and Audi Q7 cars, with owners receiving between $7,755 and $13,880 each.

The remainder of the 3.0 litre cars – made by VW, Audi and Porsche – would be repaired, and owners would be given between $7,039 and $16,114. The fix for these cars has not yet been approved, and if US regulators do not give a green light VW will be forced to buy them back, increasing the cost of the settlement from $1.2bn to more than $4bn.

The latest settlement also involves VW paying $225m to mitigate the environmental effects of NOx emissions.

Although the carmaker is still facing suits by VW shareholders in the US, the settlement would mean almost all litigation with North American drivers and the US government would be resolved.

VW reached a $4.3bn deal with Washington last month, in which VW pleaded guilty to criminal charges. In June, it agreed to the $15.3bn settlement with owners of 500,000 2.0 litre cars.

“This settlement brings to an end the final chapter of the consumer claims in the [drivers’] litigation, a resolution achieved at remarkable speed,” said Elizabeth Cabraser, counsel for the car owners. VW owners with 2.0-litre cars are to receive an additional $350 each from the Bosch settlement. Owners of 3.0-litre vehicles receive $1,500.

 


by Patrick McGee, Financial Times

February 7, 2017 | 11:00 am
12893  |   93   |   0  |   Start Conversation

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