US judge approves $14.7B deal in VW diesel scandal
A U.S. federal judge on Tuesday approved Volkswagen AG's (VOWG_p.DE) record $14.7 billion settlement with regulators and owners of 475,000 polluting diesel vehicles, and the German automaker said it would begin buying back the cars in mid-November, Reuters reported.
It represented one of the biggest corporate settlements of any kind. The action by U.S. District Judge Charles Breyer in San Francisco marked a pivotal moment for VW as it aims to move past a scandal that has engulfed the company since it admitted in September 2015 to installing secret software in diesel cars to cheat exhaust emissions tests and make them appear cleaner than they really were.
Hinrich Woebcken, president and CEO of Volkswagen Group of America Inc, called final approval of a settlement first announced in June "an important milestone in our journey to making things right in the United States," and pledged to carry out the terms "as seamlessly as possible."
Breyer turned away objections from car owners who thought the settlement did not provide enough money, saying it "adequately and fairly compensates" them. In addition to the pre-scandal "trade in" value of the vehicle, owners will receive $5,100 to $10,000 in additional compensation.
"Given the risks of prolonged litigation, the immediate settlement of this matter is far preferable," Breyer wrote.
The settlement was reached with the U.S. Justice Department, Federal Trade Commission, the state of California and vehicle owners who had filed a class action lawsuit against the world's No. 2 automaker. VW has admitted to misleading regulators and still faces an ongoing criminal investigation.
Volkswagen agreed to spend up to $10.033 billion on the buybacks and owner compensation and $4.7 billion on programs to offset excess emissions and boost clean-vehicle projects.
VW may also be allowed to repair vehicles if regulators approve fixes. The affected vehicles emit up to 40 times legally allowable pollution levels.
It represented the largest civil settlement worldwide ever reached with an automaker accused of misconduct.
While huge, the approved deal was still smaller than the $246 billion settlement reached by cigarette makers with 46 U.S. states in 1998 and the $53 billion by BP to address costs and penalties arising from the 2010 Gulf of Mexico oil spill.
In total, Volkswagen has agreed to date to spend up to $16.5 billion in connection with the scandal, including payments to dealers, states and attorneys for owners. The scandal rattled VW's global business, harmed its reputation and prompted the ouster of its CEO.
The settlement covers 2.0-liter polluting diesel Beetle, Golf, Jetta, Passat and Audi A3 cars from the 2009 through 2015 model years. Up to 490,000 people will take part in the settlement because some vehicles had multiple owners.
Volkswagen spokeswoman Jeannine Ginivan said the automaker expects to begin buying back vehicles in mid-November. VW has hired 900 people, including one to be stationed at each dealership, to handle buybacks.