Volkswagen to Pay $1.2B or More to Owners of Big Diesels

February 1, 2017 Updated: February 1, 2017
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FRANKFURT, Germany—Volkswagen has agreed to pay at least $1.2 billion in buybacks and compensation to settle claims from U.S. owners of cars with larger diesel engines that the company rigged to cheat on emissions tests.

And the company could pay even more—as much as $4 billion—if it can’t come up with an acceptable fix for cars that can be repaired.

The proposed settlement filed late Tuesday before Judge Charles R. Breyer in U.S. District Court in San Francisco covers owners of some 75,000 Audi, Volkswagen and Porsche cars with 3.0-liter diesel engines.

Volkswagen has already agreed on a $15 billion settlement for some 500,000 smaller, 2.0 liter diesel engines.

Under Tuesday’s proposed class action settlement, owners of older models from 2009-2012, which cannot be fixed to meet pollution standards, will be offered buybacks or trade-ins plus compensation ranging from $7,755 to $13,880, according to a statement from owners’ attorneys.

FILE - In this Oct. 13, 2015, file photo, a Volkswagen Touareg diesel is tested in the Environmental Protection Agency's cold temperature test facility in Ann Arbor, Mich. Volkswagen has agreed to pay at least US$ 1.2 billion in buybacks and compensation to settle claims from U.S. owners of cars with larger diesel engines that the company rigged to cheat on emissions tests. The proposed settlement filed late Tuesday, Jan. 31, 2017 in U.S. District Court in San Francisco covers owners of some 75,000 Audi, Volkswagen and Porsche cars with 3.0-liter diesel engines.  (AP Photo/Carlos Osorio, File)
In this Oct. 13, 2015, file photo, a Volkswagen Touareg diesel is tested in the Environmental Protection Agency’s cold temperature test facility in Ann Arbor, Mich. (AP Photo/Carlos Osorio)

People with newer cars from model years 2013-16, which can be fixed, will get compensation of $7,039 to $16,114.

That’s if VW can come up with a fix approved by U.S. environmental authorities by an agreed deadline. If not, buybacks could push the cost as high as the $4.04 billion laid out in court documents. The deal must still get court approval to take effect.

Parts supplier Robert Bosch GmbH also agreed to pay $327.5 million, while not accepting it was at fault. CEO Volkmar Denner said the company settled so it could focus on its business activities. “We wish to devote our attention and our resources to the transition in mobility and in other areas of activity,” Denner said in a statement.

The Wolfsburg-based automaker has admitted it equipped diesel engines with software that detected when the vehicle was being tested and turned the emissions controls off during everyday driving. The result was cars that emitted some 40 times the U.S. limits of nitrogen oxides, a pollutant that can harm people’s health. Some 11 million cars worldwide have the deceptive software.

The proposed civil diesel settlements help put the scandal behind the company, after it agreed to plead guilty and pay $4.3 billion to settle U.S. criminal issues. But legal issues remain for Volkswagen’s former CEO, Martin Winterkorn, and 36 others who are under criminal investigation in Germany. U.S. prosecutors have criminally charged seven former Volkswagen employees.

Investors in Germany are suing the company, saying management didn’t inform them of the problem in a timely way. Volkswagen shares plunged after the scandal broke.

The company’s reputation has taken a beating since U.S. authorities revealed the cheating in September 2015. But that didn’t stop VW from passing Toyota last year to become the world’s largest carmaker by sales. Booming sales in China helped Volkswagen win the sales crown with 10.3 million vehicles sold to 10.2 million for Toyota.