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The legal situation surrounding Volkswagen’s sale of nearly 475,000 vehicles with 2.0-liter TDI engines that failed to comply with U.S. emissions standards got a bit clearer with news the automaker will compensate buyers of 2009-2015 Volkswagen Beetle, Golf, Jetta and Passat TDI and Audi A3 TDI models as well as other aggrieved parties with a $14.7 billion settlement.

Buybacks, cash payments

Under terms of its tentative agreement with the U.S. Department of Justice, the State of California, the U.S. Federal Trade Commission (FTC) and private plaintiffs, VW will set aside up to $10.3 billion to cover the cost of vehicle buybacks and lease terminations, emissions modifications (if approved) and direct cash payments to affected customers. It also agreed to pay $2.7 billion into an environmental remediation fund over the course of three years and to invest $2.0 billion in initiatives that will promote the use and infrastructure for zero emissions vehicles in the U.S. Beyond that, Volkswagen announced it has come to an agreement with the attorneys general of 44 states, the District of Columbia and Puerto Rico that will see it pay approximately $603 million to resolve existing and potential consumer protection claims in each of those locations.

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The settlements – which are still subject to approval by Judge Charles R. Breyer of the United States District Court for the Northern District of California -- do not cover potential fines that could still be levied under the Clean Air Act nor any penalties that relate to the 85,000 Audi, Porsche and VW models fitted with the company’s non-compliant 3.0-liter V6 turbodiesel. Other open legal issues include pending claims for civil penalties as well as potential criminal liability.

Several options offered

According to stipulations in VW’s primary agreement, owners of a 2.0-liter TDI vehicle will have several options. The first will be to have VW repurchase their car outright -- for its full retail value as of September 2015, just before the emissions scandal became public – and get an additional $5,100-$10,000 compensation. That package would value each vehicle between $12,500-$44,000 depending on its make, model, year, mileage and region where purchased. Those with an eligible leased TDI model will be able to terminate their contracts without penalty and also receive a lease-specific compensation while owners who wish to retain their vehicles pending EPA approval of a yet-to-be disclosed potential fix of the emissions system also would qualify for additional cash compensation. “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 in a statement. For more complete information, visit: https://www.epa.gov/enforcement/volkswagen-clean-air-act-partial-settlement.

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