Volkswagen has reached "an agreement in principle" to settle claims over its diesel emissions scandal. Under the proposal, consumers would have several options:
- The company will buy back vehicles, presumably at market value
- VW will address the faulty emissions system
- Leaseholders will be allowed to cancel their lease without penalty
The deal was announced Thursday at a federal court hearing. It includes Volkswagen and other key parties, including the Environmental Protection Agency, the California Air Resources Board, and the California Attorney General.
Volkswagen will also contribute to a fund to promote green automotive technology and pay for environmental damages.
The settlement only addresses the 480,000 cars with 2-liter diesel engines. Volkswagen also sold about 80,000 3-liter engines with the emissions cheat that don’t appear to be addressed in the deal.
It’s still unclear when owners can exercise their options, but the federal judge in San Francisco overseeing the case indicated he expected a formalized agreement within 60 days. Until then, many details of the agreement will remain under wraps. The judge indicated he would accept public comments on the deal once the agreement is formalized.
Just the buy-back portion of the plan could cost Volkswagen as much $7.3 billion. Still to be determined are the cost of fines or penalties which may be assessed for wrongdoing at some future date. And the company faces a variety of other lawsuits and penalties, both in the U.S. and in other countries where it sold a total of 11 million vehicles equipped with the emission cheat.
The company used a so-called defeat device which ramped up emissions controls when vehicles were being tested but dialed them back under normal driving conditions, causing vehicles they promoted as "clean diesel" to produce as much as 40 times the maximum emissions under U.S. standards.
U.S. District Judge Charles Breyer said he was pleased with the agreement. Attorneys for Volkswagen also appeared happy with the outcome. One attorney told the judge he’d put in 400 hours over the last four weeks working on the deal.
Take Two motor critic Susan Carpenter joined the show to provide more details. Listen to the full interview by pressing the blue play button above.