Volkswagen Announces Settlement Plan For Scandal

Today Volkswagen has announced their settlement plan for the diesel scandal that began in September of last year. The settlement is still subject to court approval, but it is as follows:

Buy back or terminate the leases of eligible vehicles, or provide free emissions modifications (if approved by the EPA and CARB), and also make cash payments to affected current and certain former owners and lessees.

Volkswagen will establish a single funding pool to cover the 2.0-liter TDI settlement program. The maximum funding amount will not exceed $10.033 billion and is dependent on how many customers participate in the program and which option they choose if proposed modifications are approved.
Customers can choose to sell back their vehicle to Volkswagen or terminate their lease without penalty, or, if a modification is approved, choose to have their vehicle modified free of charge and keep it. Customers who select any of these options will also receive a cash payment from Volkswagen.
An eligible vehicle’s value for a buyback will be determined based on the Clean Trade-In Value as published in the September 2015 edition of the NADA Used Car Guide, with adjustments for factory options and mileage.

Affected vehicles values will be determined based on the Clean Trade-In Value as published in the September 2015 edition of the NADA Used Car Guide, this will neglate any of the scnadal issues in the value of the vehilce.

Support the following environmental programs in the United States by agreement with the EPA and CARB:

Pay $2.7 billion over three years into an environmental trust, managed by a trustee appointed by the Court, to remediate excess nitrogen oxide (NOx) emissions from 2.0-liter TDI vehicles.
Invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives.

“Today’s announcement is within the scope of our provisions and other financial liabilities that we have already disclosed, and we are in a position to manage the consequences. It provides further clarity for our U.S. customers and dealers as well as for our shareholders. Settlements of this magnitude are clearly a very significant burden for our business. We will now focus on implementing our TOGETHER-Strategy 2025 and improving operational excellence across the Volkswagen Group,” said Frank Witter, Chief Financial Officer of Volkswagen AG.

The settlement announced today is only for the 2.0-liter diesel engines, Volkswagen still needs to reach a settlement on the other motors affected.

If the court approves this settlement VW agrees to start it right away. Approval looks to come in the fall of 2016. Vehicle owners do not need to contact VW or dealers as they will receive information once the court grants preliminary approval of the proposed class settlement at a hearing scheduled to take place on July 26, 2016.

The estimated cash payment from Volkswagen is to be around $5,100 and could be more depending on the year of the vehicle. Vehicle owners have had to wait a long time for this announcement, are you happy with the settlement terms? If not, tell us what you were hoping for in the comments below!