Owners of certain Volkswagen vehicles with diesel engines caught up in an emissions cheating scandal will soon have a choice to make about what to do about their cars — sell them or get them fixed.
According to federal court filings, Volkswagen AG has agreed to a nearly $15 billion joint settlement with regulators to help resolve the emissions scandal involving its 2.0-liter diesel engines, which has become a global crisis for the German auto giant.
In two related settlements — one with the U.S. government and the state of California, and another with the U.S. Federal Trade Commission — VW agreed to spend more than $10 billion to compensate consumers and another $4.7 billion that would be used to mitigate pollution from vehicles sold as “clean diesels” and to develop new zero emissions vehicles and related infrastructure.
Georgia is one of more than 40 states involved in a separate settlement with Volkswagen involving trade practices.
Georgia Attorney General Sam Olens office said Tuesday VW has agreed to pay penalties totaling $570 million to the states in the settlement related to unfair and deceptive trade practices by marketing and selling “clean diesel” cars equipped with devices to circumvent emissions testing.
The settlement involves more than 17,000 cars in Georgia, Olens’ office said. Georgia could receive more than $58 million in environmental mitigation funds. VW is also paying more than $1,000 per vehicle to the states for restitution, which will total more than $18.8 million for cars sold and leased in the state of Georgia, Olens’ office said.
Volkswagen has agreed to offer customers a buyback option or lease termination for 500,000 vehicles made between 2009 and 2015 with the 2.0-liter engines. The models include Volkswagen turbo-diesel or TDI Jettas, Passats, Golfs and Beetles and diesel-powered Audi A3 models.
These cars were equipped with “defeat devices” intended to cheat on emissions tests, the government said. The cars were dubiously marketed as “clean diesel” vehicles that offered high gas mileage, high performance while meeting or exceeding environmental standards.
“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment,” Deputy Attorney General Sally Q. Yates said in a news release. “This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust. And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go.”
The settlements announced Tuesday have yet to approved by a federal court in California. The government said consumer payments may begin as early as October.
U.S. regulators said VW must offer to buy back affected vehicles purchased before the scandal broke in September for the full retail value as of that date. The government said owners will receive between $12,500 and $44,000 depending on the value of the car, mileage and other factors. The Federal Trade Commission order also will offer customers the options of having loans on their cars forgiven if they are upside down on the value of the vehicle, the release said.
VW also has the option to apply with regulators for emissions modifications to bring the affected vehicles into environmental compliance. Under this scenario, VW owners could opt to have their cars repaired and receive settlement money to offset harm caused by VW’s “deceptive advertising,” the release said.
Other terms of the settlement include a requirement that VW pay $2.7 billion to fund projects to reduce greenhouse gas emissions and a $2 billion investment toward advancement of zero emission vehicles.
“Volkswagen’s deliberate circumvention of federal emission standards deceived consumers,” Olens said in a release. “This settlement brings justice to affected Georgia consumers.”
The settlement, however, does not involve some 85,000 vehicles with 3.0-liter diesels, mostly sold under the Audi and Porsche nameplates.
Other litigation and probes remain in progress, including a federal criminal probe and numerous civil cases, according to the Wall Street Journal.
Volkswagen emissions settlements
Two websites have been established for more information about the settlements:
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