Passenger Vehicles

Volkswagen emissions scandal: VW reaches a settlement with US government

by Jimi Beckwith, Autocar UK Jun 28, 2016

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Volkswagen has agreed to the largest automotive settlement in the history of the US, as it has agreed upon a $14.7 billion (around Rs 92,859 crore) scheme for US customers.

The settlement means that Volkswagen will buy back the cars affected by the emissions scandal, and pay the owners of the affected vehicles up to $10,000 (Rs 6.31 lakh) in compensation.

Because residual values of Volkswagen cars in the US have dropped since the scandal broke last September, the buyback scheme will adhere to the trade-in value of the affected vehicles before the scandal – a difference of over $2,500 (around Rs 1.58 lakh).

Volkswagen continues to draw criticism from political figures, as it stands by its decision to not offer compensation to European customers, despite the mounting pressure to do so.

Spokespeople from Volkswagen have claimed that compensation is not necessary in the UK and the rest of Europe, as the fix is less extensive and customers will therefore have their cars back soon after they have been recalled.

Settlement has been a large factor in the emissions scandal, and Volkswagen has had to negotiate the deal with various factions in the US. However, it's possible that customers can now eschew compensation and independently sue Volkswagen USA.

The compensation scheme that has been reached is still not a final conclusion to the saga, however, as it still needs to be officially approved by a US judge before compensation and buy-backs can commence.

Nearly half a million diesel vehicles fall under the terms of the settlement, and $10 billion (Rs 63,170 crore) has been put aside by Volkswagen for the purpose of buy-backs, fixes and compensation.

A further $2 billion (around Rs 12,634 crore) will be put into the development of zero-emissions vehicles such as hydrogen fuel cell cars and electric vehicles, while $2.7 billion (around Rs 17,055 crore) will be put into environmental mitigation.

In the UK, it was recently revealed that Volkswagen offered to cover the cost of government retesting of vehicle emissions. However, the offer was only extended to Volkswagen Group vehicles, rather than all of the cars tested from various manufacturers, which reportedly cost a total of £2 million. 

The results of the retesting scheme revealed that only Volkswagen Group products used the so-called ‘defeat devices’, the discovery of which sparked the emissions scandal.

Please note that converted monetary figures were correct at the time of writing, but may vary due to the fluctuating value of sterling following the recent EU referendum. 

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