BY Richard Summerfield
A US district judge in San Francisco has approved one of the biggest corporate settlements on record, stemming from the Volkswagen AG diesel emissions scandal which erupted last year. The company admitted last year that it had equipped its diesel powered vehicles with devices able to circumnavigate emissions testing, which allowed them to releases levels of pollutants far in excess of permitted levels.
Under the terms of the settlement, Volkswagen will offer drivers of 475,000 of the company’s diesel-powered vehicles with 2-litre engines the option of selling back their cars to Volkswagen or waiting for a government-approved fix which will allow the vehicles to remain in service. Consumers have until September 2018 to decide whether to accept the buyback offer. If Volkswagen does not repair or fix at least 85 percent of affected cars by June 2019, the company will incur further penalties. Nearly 340,000 owners of Volkswagen vehicles, including Beetles, Passats, and Audi A3s, have registered to take part in the settlement. About 3500 owners have opted out.
Volkswagen has had to allocate up to $10bn for consumers who wish to trade in their vehicles. Furthermore, Volkswagen’s customers will also receive an additional cash payment of between $5100 and $10,000 per person by way of an apology. The settlement deal also includes a $2.7bn contribution the company must make to an environmental trust over the three year period in order to offset the pollution caused by Volkswagen’s diesel vehicles. The company will also be required to invest $2bn in zero-emission vehicles over the next 10 years.
"Final approval of the 2.0L TDI settlement is an important milestone in our journey to making things right in the United States, and we appreciate the efforts of all parties involved in this process. Volkswagen is committed to ensuring that the program is now carried out as seamlessly as possible for our affected customers and has devoted significant resources and personnel to making their experience a positive one," said Hinrich J. Woebcken, president and CEO of Volkswagen Group of America, Inc., in a statement announcing the approval.
The court’s approva did not come as a surprise. Indeed, Judge Breyer, who presided over the hearing related to the settlement, had indicated over the summer that he would approve the deal. Both parties had been urged by the judge to settle the case in a timely fashion, noting that “intensive” negotiations would provide “benefits much sooner than if litigation were to continue” and reduce the prospect of “additional environmental damage".