We all know things haven’t been easy for Volkswagen AG and the governments of the world in the wake of the infamous Dieselgate scandal that’s been plaguing VW. But after months of arbitration and negotiations, Volkswagen AG just announced to have reached an agreement with the EPA and U.S. Department of Justice on how to deal with customers who own cars affected by Dieselgate.
Click here for more news on Volkswagen’s Dieselgate scandal.
In case you forgot about the Dieselgate scandal in our age of media bombardment, Volkswagen’s in a lot of trouble for programming faulty software for the engine to deceitfully pass EPA emissions testis on many of their diesel models. Over the past several months, governments have been deciding how to punish Volkswagen, with plenty already happening on their own turf. But in the US, agreements were just made with the Department of Justice and the EPA as to how Volkswagen AG will compensate affected owners.
The solution: to buy back all 2.0L diesel-powered Volkswagens in America. That number amounts to a total of around 475,000 owners, and that’s a lot of Volkswagens to buy back.
The breakdown is as follows for cars eligible for buyback, all of which have to be the TDI 2.0L diesel models:
Volkswagen
Jetta TDI
Model Years: 2009-2015
Beetle TDI
Model Years: 2010-2015
Passat TDI
Model Years: 2012-2015
Golf TDI
Model Years: 2013-2015
Audi
A3 TDI
Model Years: 2012-2013, 2015
Amounting to around $14.7 billion, the settlement detailed that Volkswagen must buyback all the affected cars “at their retail value as of September 2015,” meaning owners could be entitled to anywhere in between $12,500 to $44,000 per car. That’s a lot of dough back and you’d be quite rich if you had a few TDIs in the stable from recent years in good condition.
Volkswagen also is responsible for any outstanding loans or liens on recalled cars, up to 130 percent times the car’s retail value, ultimately costing the German automaker, $10.033 billion with the buyback program alone.
Owners who are currently leasing their car can opt to have them terminated at no cost or can hang on to the cars until Volkswagen implements a feasible fix to meet EPA testing rules.
Other terms in the settlement include the obligation to spend $2.7 billion on funding for projects related to the reduction of NOx emissions, and on top of that, VW is also required to spend another $2 billion to aid the advancement of infrastructure and zero-emissions vehicles for the next decade. This ain’t no slap on the wrist folks…
It’s also important to bear in mind that the whole ordeal is still far from over. Volkswagen needs to find a fix for the recalled cars and investigations for the 3.0L TDI V6 are still ongoing.
For the statement, scroll down below.
Jun 28, 2016
Proposed settlement program includes vehicle buybacks and lease terminations, emissions modifications (if approved) and cash payments to affected customers for approximately 475,000 eligible 2.0L TDI vehicles
Volkswagen agrees to $2.7 billion environmental remediation fund and to invest $2.0 billion in initiatives to promote the use of zero emissions vehicles in the U.S.
Separate resolution with U.S. states settles consumer protection claims
Herndon, Va. /Wolfsburg, Germany (June 28, 2016) – Volkswagen AG announced today that it has reached settlement agreements with the United States Department of Justice (DOJ) and the State of California; the U.S. Federal Trade Commission (FTC); and private plaintiffs represented by the Plaintiffs’ Steering Committee (PSC) to resolve civil claims regarding eligible Volkswagen and Audi 2.0L TDI diesel engine vehicles in the United States. Of approximately 499,000 2.0L TDL vehicles that were produced for sale in the United States, approximately 460,000 Volkswagen and 15,000 Audi vehicles are currently in use and eligible for buybacks and lease terminations or emissions modifications, if approved by regulators. Volkswagen will establish a maximum funding pool for the 2.0L TDI settlement program of $10.033 billion. That amount assumes 100% participation and that 100% of eligible customers choose a buyback or lease termination.
The agreements covering the proposed 2.0L TDI settlement program are subject to the approval of Judge Charles R. Breyer of the United States District Court for the Northern District of California, who presides over the federal Multi-District Litigation (MDL) proceedings related to the diesel matter.
Volkswagen also announced that it has agreed with the attorneys general of 44 U.S. states, the District of Columbia and Puerto Rico to resolve existing and potential state consumer protection claims related to the diesel matter for a total settlement amount of approximately $603 million.
“We take our commitment to make things right very seriously and believe these agreements are a significant step forward,” said Matthias Müller, Chief Executive Officer of Volkswagen AG. “We appreciate the constructive engagement of all the parties, and are very grateful to our customers for their continued patience as the settlement approval process moves ahead. We know that we still have a great deal of work to do to earn back the trust of the American people. We are focused on resolving the outstanding issues and building a better company that can shape the future of integrated, sustainable mobility for our customers.”
Three agreements have been submitted to the Court for its approval with respect to the proposed 2.0L TDI settlement program: (1) a Consent Decree filed with the Court by the DOJ on behalf of the Environmental Protection Agency (EPA) and by the State of California by and through the California Air Resources Board (CARB) and the California Attorney General; (2) a Consent Order submitted by the FTC; and (3) a proposed class settlement agreement with the PSC on behalf of a nationwide settlement class of current and certain former owners and lessees of eligible 2.0L TDI Volkswagen and Audi vehicles. The parties believe that the class settlement as presented to the Court will provide a fair and reasonable resolution for affected Volkswagen and Audi customers. Volkswagen continues to work expeditiously to reach an agreed resolution for affected vehicles with 3.0L TDI V-6 diesel engines.
On April 22, 2016, Volkswagen recognized total exceptional charges of €16.2 billion in its financial statements for 2015 for worldwide provisions related to technical modifications and repurchases, legal risks and other items as a result of the diesel matter. As noted at that time, due to the complexities and legal uncertainties associated with resolving the diesel matter, a future assessment of the risks may be different.
“Today’s announcement is within the scope of our provisions and other financial liabilities that we have already disclosed, and we are in a position to manage the consequences. It provides further clarity for our U.S. customers and dealers as well as for our shareholders. Settlements of this magnitude are clearly a very significant burden for our business. We will now focus on implementing our TOGETHER-Strategy 2025 and improving operational excellence across the Volkswagen Group,” said Frank Witter, Chief Financial Officer of Volkswagen AG.
The agreements announced today are not an admission of liability by Volkswagen. By their terms, they are not intended to apply to or affect Volkswagen’s obligations under the laws or regulations of any jurisdiction outside the United States. Regulations governing nitrogen oxide (NOx) emissions limits for vehicles in the United States are much stricter than those in other parts of the world and the engine variants also differ significantly. This makes the development of technical solutions in the United States more challenging than in Europe and other parts of the world, where implementation of an approved program to modify TDI vehicles to comply fully with UN/ECE and European emissions standards has already begun by agreement with the relevant authorities.
Proposed 2.0L TDI Settlements
Subject to Court approval of the proposed 2.0L TDI settlement program, Volkswagen has agreed, among other terms, to:
Buy back or terminate the leases of eligible vehicles, or provide free emissions modifications (if approved by the EPA and CARB), and also make cash payments to affected current and certain former owners and lessees.
o Volkswagen will establish a single funding pool to cover the 2.0L TDI settlement program. The maximum funding amount will not exceed $10.033 billion and is dependent on how many customers participate in the program and which option they choose if proposed modifications are approved.
o Customers can choose to sell back their vehicle to Volkswagen or terminate their lease without penalty, or, if a modification is approved, choose to have their vehicle modified free of charge and keep it. Customers who select any of these options will also receive a cash payment from Volkswagen.
o An eligible vehicle’s value for a buyback will be determined based on the Clean Trade-In Value as published in the September 2015 edition of the NADA Used Car Guide, with adjustments for factory options and mileage.
Support the following environmental programs in the United States by agreement with the EPA and CARB:
o Pay $2.7 billion over three years into an environmental trust, managed by a trustee appointed by the Court, to remediate excess nitrogen oxide (NOx) emissions from 2.0L TDI vehicles.
o Invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives.
Volkswagen will begin the settlement program as soon as the Court grants final approval to the settlement agreements. At the earliest, approval will occur in the fall of 2016. Potential claimants under the class settlement do not need to contact Volkswagen or Audi, or their dealers, at this time. Individual class members will receive extensive notification of their rights and options (including the option to “opt out” of the settlement agreement) if the Court grants preliminary approval of the proposed class settlement at a hearing scheduled to take place on July 26, 2016.
– By: Chris Chin