Washington DC - Volkswagen will pay as much as $15.3 billion (R232 billion) after admitting it cheated on US diesel emissions tests for years, agreeing to buy back vehicles from customers and provide funding that could benefit makers of cleaner technologies.
The largest-ever automotive buyback offer in the United States came in a deal announced on Tuesday by the Justice Department, Federal Trade Commission, Environmental Protection Agency and California state regulators. The proposed consent decree confirmed that Volkswagen would set aside $10.033 billion (R152 billion) to cover buybacks or fixes for diesel cars and SUVs that used illegal software to defeat government emissions tests.
Volkswagen admitted in September 2015 that it had installed secret software that allowed US vehicles to emit up to 40 times legally allowable pollution. It may still face criminal charges and oversight by an independent monitor, and a criminal settlement that could include measures to ensure Volkswagen would not engage in further cheating.
The company’s lead lawyer, Robert Giuffra Jr, said: “We didn't follow a grind-it-out litigation strategy, which would have been counterproductive for Volkswagen.
“We moved with lightning speed to settle with our federal and state regulators and the private plaintiffs.”
Boosting sales of green cars
Under the Justice Department deal, Volkswagen will provide $2 billion (R30.3 billion) over 10 years to fund programs directed by California and the EPA to promote construction of electric vehicle charging infrastructure, development of zero-emission ride-sharing fleets and other efforts to boost sales of cars that don’t burn fossil fuels.
Volkswagen also agreed to put up $2.7 billion (R41 billion) over three years to enable government and tribal agencies to replace old buses or to fund infrastructure to reduce diesel emissions.
The settlement covers 475 000 two-litre diesel Jetta, Beetle, Audi A3, Golf, and Passat cars from the 2009-2015 model years.
Volkswagen also announced a separate settlement with 44 US states, the District of Columbia and Puerto Rico that will cost at least $600 million (R9 billion), bringing the total to as much as $15.3 billion (R232 billion).
Deputy US attorney general Sally Yates said a criminal investigation remained active.
“We're looking at multiple companies and multiple individuals,” she said. “By duping regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment.”
The EPA is investigating other automakers for potential emissions problems; EP administrator Gina McCarthy said the agency “will be releasing information as it becomes available”.
Volkswagen still faces criminal investigations in Germany and other countries, and lawsuits from investors around the world, as it plans a multi-billion-euro investment program to introduce more than 30 electric cars by 2025.
Fix or sell
Owners have until late 2018 to decide whether to sell the vehicles back. The deals would move Volkswagen close to the €16.2 billion (R272 billion) it has set aside to cover the costs of the scandal.
But spending on buybacks could be much less if regulators approve fixes and owners opt for repairs. Most owners will get $5100 - $10,000 (R77 000 - R152 000) in compensation, including the pre-scandal value of the cars, documents filed on Tuesday said.
The company expects to begin buying back vehicles in October, when a US judge is expected to give final approval to the settlements, and is to start proposing fixes in November.
Volkswagen cannot resell or export vehicles it buys back unless the EPA approves a fix, the documents said. Volkswagen must repair or buy back 85 percent of the 475 000 vehicles by June 2019 or face penalties of $100 million (R1.5 billion) for every percentage point below that figure.
The agreement does not lift a ban on sales by Volkswagen of its US 2016 diesel vehicles. Nor does it cover fees for lawyers of owners suing the company or address 80 000 larger polluting three-litre Porsche, Audi and Volkswagen diesel cars.
Volkswagen could also face billions in additional costs if it is forced to buy back the three-litre vehicles, and is also likely to face significant yet-to-be determined fines under the US Clean Air Act for emissions violations.
The settlement does not resolve lawsuits filed in 2015 by owners against component supplier Bosch, which was accused of conspiring with Volkswagen to evade emissions standards.
Reuters