 "Volkswagen")
Volkswagen and US officials have reached a framework deal under which the automaker would offer to buy back almost 500,000 diesel cars that used sophisticated software to evade US emission rules, two people briefed on the matter have said.
The German automaker is expected to tell a federal judge in San Francisco that it has agreed to offer to buy back up to 500,000 2.0-litre diesel vehicles sold in the United States that exceeded legally allowable emission levels, the people said.
That would include versions of the Jetta sedan, the Golf compact and the Audi A3 sold since 2009. The buyback offer does not apply to the bigger, 80,000 3-litre diesel vehicles also found to have exceeded US pollution limits, including Audi and Porsche SUV models, the people said.
US-listed shares of Volkswagen rose nearly six per cent to $30.95 following the news. VW in September admitted cheating on emissions tests for 11 million vehicles worldwide since 2009, damaging the automaker's global image. As part of the settlement with US authorities including the Environmental Protection Agency, Volkswagen has also agreed to a compensation fund for owners, a third person briefed on the terms said.
The compensation fund is expected to represent more than $1 billion on top of the cost of buying back the vehicles, but it is not clear how much each owner might receive, the person said. According to Business Standard estimates, even if each car is bought back at $25,000, the total hit for the company will come to $12.5 bn
Volkswagen may also offer to repair polluting diesel vehicles if US regulators approve the proposed fix, the sources said. A Volkswagen spokeswoman, the EPA and the Justice Department declined to comment Wednesday.
The final cost to Volkswagen could be significant. On the regulatory side, Volkswagen faces a theoretical maximum penalty of $18 billion in the United States. While lawyers in the case predict the actual fine imposed on Volkswagen to be much less, it would still set a record for an automaker accused of clean-air violations. The largest comparable fine was $100 million imposed on the Hyundai-Kia group in 2014 for violating standards on greenhouse gas emissions, The New York Times had reported.
VW will pay cash compensation to owners who either sell their vehicles back or get them fixed, one of the people briefed on the matter said. Owners selling back their vehicles will get an additional cash payment on top of receiving the estimated value of the vehicles from before the emissions scandal became public in September 2015.
Owners are expected to have around two years to decide whether to sell back vehicles or get them repaired. It is not clear whether Volkswagen will be allowed to resell vehicles they buy back, the source said.
The framework deal with US officials was reached after lengthy talks in recent days at the Washington law office of Robert Mueller. The former FBI director is the court appointed mediator named to help settle more than 500 civil suits filed against VW. The talks, which continued over the week, included all the government agencies and lead plaintiffs attorneys suing GM.
Some elements of the settlement are still being worked out and details are not expected to be announced Thursday at a court hearing, the people briefed on the matter said. The final deal could still change before it is officially announced, they said.
US District Judge Charles Breyer in March gave Volkswagen until Thursday “to announce a concrete proposal for getting the polluting vehicles off the road.”
Breyer said in March the “proposal may include a vehicle buy-back plan or a fix approved by the relevant regulators that allows the cars to remain on the road with certain modifications.” A final settlement is also expected to include an environmental remediation fund to address excess pollution emitted by the US vehicles since 2009.
It is not clear if the deal will resolve the US Justice Department's civil suit filed in January against Volkswagen or if Volkswagen will agree to pay a civil penalty. Volkswagen also faces ongoing criminal investigations by the Justice Department and other prosecutors around the world. Separately, Germany's Die Welt newspaper reported Wednesday that the deal to settle the case would involve it paying each affected customer $5,000. But a person briefed on the matter told Reuters that no decisions on how individual compensation will be awarded have been made.
In December, Volkswagen said it was creating an independent claims program for owners of vehicles with excess emissions.
It named compensation expert Ken Feinberg, who administered funds for the September 11, 2001 attacks, BP Plc Deepwater Horizon oil spill and General Motors Co ignition switch crashes, to create and administer the program.
$18 bn
Maximum penalty Volkswagen faces
$100 mn
Largest comparable fine imposed on the Hyundai-Kia in 2014
The German automaker is expected to tell a federal judge in San Francisco that it has agreed to offer to buy back up to 500,000 2.0-litre diesel vehicles sold in the United States that exceeded legally allowable emission levels, the people said.
That would include versions of the Jetta sedan, the Golf compact and the Audi A3 sold since 2009. The buyback offer does not apply to the bigger, 80,000 3-litre diesel vehicles also found to have exceeded US pollution limits, including Audi and Porsche SUV models, the people said.
US-listed shares of Volkswagen rose nearly six per cent to $30.95 following the news. VW in September admitted cheating on emissions tests for 11 million vehicles worldwide since 2009, damaging the automaker's global image. As part of the settlement with US authorities including the Environmental Protection Agency, Volkswagen has also agreed to a compensation fund for owners, a third person briefed on the terms said.
The compensation fund is expected to represent more than $1 billion on top of the cost of buying back the vehicles, but it is not clear how much each owner might receive, the person said. According to Business Standard estimates, even if each car is bought back at $25,000, the total hit for the company will come to $12.5 bn
Volkswagen may also offer to repair polluting diesel vehicles if US regulators approve the proposed fix, the sources said. A Volkswagen spokeswoman, the EPA and the Justice Department declined to comment Wednesday.
The final cost to Volkswagen could be significant. On the regulatory side, Volkswagen faces a theoretical maximum penalty of $18 billion in the United States. While lawyers in the case predict the actual fine imposed on Volkswagen to be much less, it would still set a record for an automaker accused of clean-air violations. The largest comparable fine was $100 million imposed on the Hyundai-Kia group in 2014 for violating standards on greenhouse gas emissions, The New York Times had reported.
VW will pay cash compensation to owners who either sell their vehicles back or get them fixed, one of the people briefed on the matter said. Owners selling back their vehicles will get an additional cash payment on top of receiving the estimated value of the vehicles from before the emissions scandal became public in September 2015.
Owners are expected to have around two years to decide whether to sell back vehicles or get them repaired. It is not clear whether Volkswagen will be allowed to resell vehicles they buy back, the source said.
The framework deal with US officials was reached after lengthy talks in recent days at the Washington law office of Robert Mueller. The former FBI director is the court appointed mediator named to help settle more than 500 civil suits filed against VW. The talks, which continued over the week, included all the government agencies and lead plaintiffs attorneys suing GM.
Some elements of the settlement are still being worked out and details are not expected to be announced Thursday at a court hearing, the people briefed on the matter said. The final deal could still change before it is officially announced, they said.
US District Judge Charles Breyer in March gave Volkswagen until Thursday “to announce a concrete proposal for getting the polluting vehicles off the road.”
Breyer said in March the “proposal may include a vehicle buy-back plan or a fix approved by the relevant regulators that allows the cars to remain on the road with certain modifications.” A final settlement is also expected to include an environmental remediation fund to address excess pollution emitted by the US vehicles since 2009.
It is not clear if the deal will resolve the US Justice Department's civil suit filed in January against Volkswagen or if Volkswagen will agree to pay a civil penalty. Volkswagen also faces ongoing criminal investigations by the Justice Department and other prosecutors around the world. Separately, Germany's Die Welt newspaper reported Wednesday that the deal to settle the case would involve it paying each affected customer $5,000. But a person briefed on the matter told Reuters that no decisions on how individual compensation will be awarded have been made.
In December, Volkswagen said it was creating an independent claims program for owners of vehicles with excess emissions.
It named compensation expert Ken Feinberg, who administered funds for the September 11, 2001 attacks, BP Plc Deepwater Horizon oil spill and General Motors Co ignition switch crashes, to create and administer the program.
$18 bn
Maximum penalty Volkswagen faces
$100 mn
Largest comparable fine imposed on the Hyundai-Kia in 2014
