Volkswagen's latest "Dieselgate" settlement got mostly positive reviews from consumer advocates, though owners of newer diesel models might have to settle for a repair rather than a buyback.
The $1.2 billion settlement announced Tuesday involves 3-liter diesel engines in VWs, Audis, and Porsches that were found to have cheated on U.S. emissions testing over several years. VW previously reached a $14.7 billion settlement with 550,000 owners of smaller, 2-liter diesel cars as well as a $4.3 billion settlement of criminal and civil charges.
The Justice Department also has indicted six former and current senior managers at the German automaker.
Under this latest accord, the final legal hurdle to VW's resolution of the Dieselgate scandal, some diesel owners will be eligible to sell their vehicles back to VW for as much as $58,000. For now, the buybacks are limited to owners of VW Touareg and Audi Q7 models from 2009 to 2012.
VW believes it can bring seven newer models into compliance with emissions standards. It has until December to get regulatory approval for a recall repair.
This latest agreement will provide substantial benefits to both consumers and the environment, says Elizabeth Cabraser, the attorney appointed by the court to negotiate on behalf of plaintiffs suing VW.
"We're another step closer to achieving our goal: providing consumers fair value for their vehicles, while repairing or removing illegally polluting vehicles from the road,'' Cabraser says.
Consumers Union, the policy and mobilization arm of Consumer Reports, also voiced support for the settlement, but said it should go further.
"We're pleased this agreement will compensate consumers," says William Wallace, policy analyst for Consumers Union. "But those with newer vehicles also should have the option to choose a buyback or lease termination, and that's not necessarily the case here. Consumers were sold a different product than advertised, and they should have the choice to no longer be a Volkswagen customer."
Volkswagen has admitted to rigging its diesel emissions controls to shut off outside of testing conditions, resulting in pollution up to 40 times the permitted amount while improving performance and fuel economy. Investigations by the Environmental Protection Agency, the Justice Department, and the California Air Resources Board have led to penalties far exceeding those paid by any other automaker doing business in the U.S.
Under the latest settlement, those with 2009 to 2012 models will get a buyback plus additional cash. For people who want to hold on to their vehicles, there will be a government-approved repair to make the engines cleaner (even if not fully compliant with emissions laws), plus a cash payment.
Buyback payments will range from $26,255 for a 2009 Touareg to $58,657 for an Audi Q7 Prestige S-Line. The figures will be based on National Automobile Dealers Association (NADA) clean trade-in book values as of September 2015, adjusted for equipment and mileage. Consumers who hang on to their vehicles will get cash compensation ranging from $9,255 to $15,380. Former owners will get cash payments ranging from $4,600 to $7,700.
Consumers with 2013 to 2016 models will get cash payments ranging from $8,500 to $17,600 if VW gets a recall fix approved by December. If not, those consumers may also receive the option of a buyback, according to Cabraser. If it comes to that, an owner the most expensive vehicle on the list, a 2016 Porsche Cayenne, could be looking at a settlement of as much as $146,272.
The newer, so-called Generation 2 models are the VW Touareg and the Audi A6 quattro, A7 quattro, A8, A8L, Q5, and Q7, as well as the Porsche Cayenne.
It's significant that Bosch, one of Volkswagen's suppliers, is included in the settlement, says Jack Gillis, a spokesman for the Consumer Federation of America. It will have to pay $350 to owners of 2-liter models and $1,500 to owners of the affected 3-liter models, according to lawyers representing VW owners.
Gillis says the payments represented both a "fair settlement for owners who trusted VW's fuel-economy claims and a strong disincentive for other companies who have, or are considering such deception."
