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 German automaker could pay even more -- as much as $4 billion -- if it can't repair many of the cars in a way that satisfies regulators. The proposed settlement filed late Tuesday before Judge Charles R. Breyer in U.S. District Court in San Francisco covers owners of some 78,000 Audi, Volkswagen and Porsche cars with 3.0-liter diesel engines.
Volkswagen has already agreed on a $15 billion settlement with owners of some 500,000 smaller, 2.0-liter diesel engines. Volkswagen has now settled most U.S. consumer claims as it tries to repair a tarnished reputation. "All of our customers with affected vehicles in the United States will have a resolution available to them," Hinrich J. Woebcken, head of Volkswagen Group of America, said in a statement.
The company still faces lawsuits from fewer than 5,000 owners of 2.0-liter diesels who opted out of the settlement, as well as some shareholder suits and numerous lawsuits filed by states for violating pollution laws. VW also has settled a U.S. criminal investigation by agreeing to pay $4.3 billion, but a probe of employee behavior continues with seven people charged in the U.S. In all, VW will pay more than $20 billion to settle civil and criminal claims in the U.S. alone.
Also pending is whether VW can adequately fix some older 2.0-liter engines. If it can't, VW will have to buy back all vehicles with the smaller diesel engines. A March 3 deadline is approaching. Legal issues also remain in Europe. Former CEO Martin Winterkorn and 36 others are under criminal investigation in Germany, where investors also are suing the company. Volkswagen shares plunged after the scandal broke in September of 2015.
Under Tuesday's proposed settlement, owners of 20,000 older 3.0-liter models dating back to 2009-2012, which cannot be fixed to meet pollution standards, will be offered buybacks or trade-ins. In addition, they will receive compensation ranging from $7,755 to $13,880, according to a statement from owners' attorneys.
People who bought 58,000 newer cars from model years 2013-16, which can be fixed, will get compensation of $7,039 to $16,114. Volkswagen says those cars can be made to comply with pollution limits. If VW can't fix the newer cars to regulators' satisfaction, then the owners' attorneys will go back to court to seek buybacks.
VW's proposed repair must win approval from 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. Volkswagen said final approval would take at least until May.
Also Tuesday, parts supplier Robert Bosch GmbH agreed to pay $327.5 million to settle claims from consumers and dealers regarding 2.0-liter and 3.0-liter engines, while not accepting it was at fault. Typical 2.0-liter owners will get $350 in addition to what they get from VW, while 3.0-liter owners will get about $1,500, said Elizabeth Cabraser, lead attorney for the owners. Bosch made the so-called "defeat device" that enabled the cheating.
Bosch CEO Volkmar Denner said the company settled so it could focus on its business. Cabraser said she's confident that the VW settlements will be completed even if President Donald Trump cuts personnel at the EPA, which has to review all of the engine repairs, noting that Breyer and the California Air Resources Board are still involved. The former head of Trump's transition team at the agency has said he expects significant budget and staff cuts.
Wolfsburg-based Volkswagen has admitted it equipped diesel engines with software that detected when the vehicle was being tested and turned the emissions controls off during every day 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.