Risk & Compliance

Judge OKs $14.7B Settlement in VW Scandal

VW calls the approval of the deal with 475,000 vehicle owners "an important milestone in our journey to making things right in the United States."
Matthew HellerOctober 25, 2016
Judge OKs $14.7B Settlement in VW Scandal

Volkswagen on Tuesday took a major step toward extricating itself from its diesel emission cheating scandal as a California judge approved a historic $14.7 billion settlement with 475,000 vehicle owners.

The deal, the largest-ever reached with an automaker accused of misconduct, gives owners of Volkswagens and Audis with 2-liter diesel engines a choice of having VW buy back their vehicle at pre-scandal “trade in” value or modify it. They will also receive $5,100 to $10,000 in additional compensation.

In his order granting final approval of the class action settlement, U.S. District Judge Charles Breyer turned away objections from car owners who thought the settlement did not provide enough money, saying it “adequately and fairly compensates class members.”

Volkswagen has 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.

Breyer also stressed that the settlement “provides benefits much sooner than if litigation were to continue” and further litigation “would cause additional environmental damage that the settlement otherwise reduces.”

The automaker admitted a year ago that it had installed “cheat devices” on diesel-powered cars from 2009 through 2015 that allowed the vehicles’ engines to emit less pollutants during emissions tests than during normal road use.

“Final approval of the [settlement] is an important milestone in our journey to making things right in the United States,” Hinrich J. Woebcken, CEO of Volkswagen Group of America, said in a news release.

“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,” he added.

As Reuters reports, the company still faces billions more in costs to address 85,000 polluting 3.0-liter vehicles and Justice Department fines for violating clean air laws.

“Judge Breyer is making them pay the price,” said Kathryn Phillips, California director for the Sierra Club environmental group. “Volkswagen chose to poison our families with dangerous pollution just to pad its pocketbook.”