Volkswagen has announced that it has reached an agreement to pay about $15 billion in penalties in a settlement with U.S. regulators over the company’s use of devices that let it cheat on emission tests. Volkswagen also settled an inquiry by attorneys general in 42 states, the District of Columbia and Puerto Rico over defrauding consumers for $500 million in penalties. The company is still facing a criminal investigation in the United States.
As part of the settlement, Volkswagen will offer to buy back the cars based on prescandal, “clean trade” values. The total amount that Volkswagen will ultimately have to pay to American car owners may not be clear for months. That number will depend on the number of owners that decide to sell their cars back to the company at the prescandal value, which will vary according to the age and mileage of the cars. That could be as much as $12,500 for an older-model Jetta to as much as $44,000 for a 2014 Audi. Just over $10 billion has been set aside for the buybacks.
Volkswagen is required to fix the cars that it buys back or to scrap them. This prevents Volkswagen from exporting the cars to countries with less stringent emissions standards. Volkswagen will also pay owners additional compensation ranging from $5,100 to $10,000, adding at least another $2.4 billion to the total.
Democratic Senators Edward J. Markey of Massachusetts and Richard Blumenthal of Connecticut, both members of the Senate Commerce, Science and Transportation Committee, said in a joint statement, “While this settlement is an historic victory for some Volkswagen vehicle owners, the automaker must ensure that owners of vehicles not covered by today’s settlement receive the same compensation options as those announced today.” The statement continued, “We continue to call on the Department of Justice to vigorously pursue its criminal investigation against Volkswagen executives who knowingly and intentionally deceived regulators.”
Shares of Volkswagen have fallen more than 20 percent since the scandal surfaced late last year. The damage to its reputation has caused the company to lose market share in Europe. Dealers in the United States say their lots are filled with diesel cars that they can’t sell. The company reported a record loss in 2015, and reported that earnings and sales declined in the first quarter of 2016.
Now that the settlement with the Americans is completed, attention will turn to Europe. There are way more affected Volkswagen diesels in Europe than in the United States. While it is estimated that nearly 500,000 Volkswagen vehicles were affected in the U.S., the automaker admitted to installing the cheating device on more than 11 million cars worldwide. European owners and politicians are clamoring for compensation.