In one of the largest consumer settlements in history, Volkswagen will buy back nearly half a million dirty diesel vehicles.
“The priority was to get the polluting cars off the road as soon as possible,” US District Judge Charles Breyer wrote in his approval of the $14.7 billion agreement. “The settlement does that.”
In the order the court posted online Tuesday morning, Volkswagen has agreed to pay more than $10 billion either to buy back or repair about 475,000 vehicles the automaker admitted it built with devices designed to deceive emissions tests. Volkswagen will also pay $2.7 billion for environmental mitigation and $2 billion for clean-emissions infrastructure.
The largest consumer class settlement in the nation’s history is progress for a scandal that regulators have said led the vehicles advertised as “clean diesel” to emit 40 times more smog-causing nitrogen oxide than the legal limit.
Some consumers have opposed the buyback offer because they want full compensation for the vehicles they bought. But others, including the plaintiffs' attorney, consumer protection advocates, and regulators, welcomed the agreement for its quick and fair resolution. Meanwhile, some European diesel owners have started to eye the deal in hopes it leads their regulators to take notice.
Under the terms of the agreement, owners will be eligible for buybacks or repairs, as well as compensation. Owners of Volkswagens and Audis with 2-liter, four-cylinder diesel engines will be able to seek buybacks starting Nov. 1. Buybacks range in value from $12,475 to $44,176, according to USA Today. They include restitution payments, and vary based on mileage.
More than 336,000 eligible owners have already registered for the settlement. The remaining customers can opt to have their vehicles repaired. If VW can’t come up with an emissions fix approved by the Environmental Protection Agency by November 2017, however, owners can switch to the buyback program.
Consumers are also eligible for about $5,000 to $10,000 in compensation, depending on the age of their car.
The deal means Volkswagen has reached a solution to get some of its dirty-diesel vehicles off the road. The Environmental Protection Agency first accused Volkswagen in September 2015 of selling for years cars marked as “clean diesel” with software that activated required air pollution equipment only during emission tests, according to Detroit News. Volkswagen then admitted to programming the vehicles to mislead testers, in violation of the federal Clean Air Act. Regulators have said that in normal driving, the cars emitted up to 40 times more smog-causing nitrogen oxide than the legal limit.
Consumer advocates including the US Public Interest Research Group (PIRG) Education Fund praised the deal because it was a fair, swift resolution.
“Consumers thought they were getting it all – a clean car, with good mileage, and good performance. They were duped,” said Mike Litt, a consumer advocate for the organization. “This compensates them for that harm, and gets them off the road.”
The organization has urged states and Volkswagen to use the environmental payments to invest in electrical vehicle charging stations and electric buses.
Ahead of Judge Breyer’s signing of the order, some Volkswagen owners urged him to reject it because they want to be compensated for the full amount they paid for their vehicles.
“We got played the fool,” Mark Dietrich, an Audi owner from San Francisco, said at hearing last week, according to court transcripts. “I object that my buyback value is being determined as of Sept. 18, 2015 – the date that Volkswagen got caught. While it might have relevance for those who sold their cars, for me this data is absolutely irrelevant. My car has been polluting and breaking emissions laws since the day I drove it off the lot.”
But Joe Rice, an attorney who represented the plaintiffs in the class-action lawsuit and helped negotiate the settlement, said it’s all about giving consumers options while also remedying environmental damages.
“Having led negotiations on behalf of plaintiffs in some of the largest civil settlements this country has seen, this is one of the fastest to reach a resolution that I have seen, making it a model for future litigation,” Mr. Rice said in a statement.
Some across the Atlantic have eyed the settlement, hoping it will force Volkswagen or their lawmakers to treat them the same way.
“As a customer in the UK, I would like to be treated the same as US customers,” Gareth Pritchard, who runs a Facebook group for British Volkswagen diesel owners, writes in a message to The Christian Science Monitor. “I think most customers would firstly like an apology, which is genuine. I then think that people would like assurance that the ‘fix’ we are being offered is fit for purpose.”
Hinrich Woebcken, the president and chief executive of Volkswagen Group of America, said the deal is an “important milestone in our journey to making things right in the United States."
“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,” Mr. Woebcken said in a statement.