By Kartikay Mehrotra and Margaret Cronin Fisk
Bloomberg News
Volkswagen AG reached a $1 billion agreement with U.S. car owners and regulators to fix or buy back about 83,000 Audi, VW and Porsche vehicles with emissions-cheating 3.0-liter diesel engines.
Tuesday’s accord covers some luxury models released since 2009 and resolves another significant piece of VW’s emissions-cheating scandal.
The U.S. Environmental Protection Agency estimated the cost of the 3-liter settlement at about $1 billion. That includes $225 million to mitigate the environmental damage caused by the vehicles, plus $25 million to support the use of zero-emission vehicles, the California Air Resources Board and the U.S. Justice Department said in statements. Details of the agreement with car owners were still being worked out and the San Francisco federal judge overseeing the case ordered lawyers to report back to him Thursday.
The settlement provides for repairing the cars if a fix is approved by the government, and like an earlier deal covering 2-liter engines, includes an offer to buy back at least some vehicles. The accord raises the amount VW has agreed to pay to resolve claims in the U.S. and Canada to more than $19 billion.
The agreement also covers claims against VW supplier Robert Bosch GmbH, which said specific terms may not be disclosed until a definitive agreement is reached and presented to the judge. “Bosch neither acknowledges the facts as alleged by the plaintiffs nor does Bosch accept any liability,” the company said in a statement.
‘Earning Back’
The deal “another important step forward in our efforts to make things right for our customers,” VW said in a statement. “We are committed to earning back the trust of all our stakeholders and thank our customers and dealers for their patience as the process moves forward.”
Jeannine Ginivan, a spokeswoman for VW’s U.S. unit declined to comment on any dollar figure until a final agreement has been reached with car owners.
The lead attorney for the car owners, Elizabeth Crabraser, said in an e-mailed statement that lawyers are working to resolve the remaining issues.
VW’s American depositary receipts rose as much as 1.4 percent, and closed up 0.2 percent to $29.05, near its intraday low. VW’s widely traded preferred shares rose almost 2 percent to 136.25 euros Tuesday before the settlement was announced in court.
The company admitted last year that about 11 million diesel cars worldwide were outfitted with a so-called defeat device to game environmental tests. The carmaker’s settlement covering 480,000 Volkswagens with 2-liter engines won final approval in October from U.S. District Judge Charles Breyer.
‘Substantial Compensation’
Tuesday’s agreement came after Breyer pressured the parties to reach an agreement on 3-liter models, holding them to tight deadlines for reporting to him as they engaged in what he called “intense discussions.” The judge said car owners would get “substantial compensation” under the agreement, whose costs may increase as the details are negotiated further.
Vehicles covered by the 3-liter settlement include the 2014 Volkswagen Touareg, some 2015 Porsche vehicles and some 2016 Audi models.
The recall plans for most 3-liter vehicles involve a simple software update, people familiar with the matter have said. Avoiding a full buyback of all the cars would save the company about $4 billion, the people said.
Criminal Probes
The carmaker is still under criminal investigation in the U.S. and on the hook for outstanding civil claims from several states. It also faces hundreds of investor lawsuits in Germany and is the subject of a criminal probe there as well as in South Korea.
“Today’s partial settlement does not resolve any pending claims for civil penalties, nor does it address any potential criminal liability,” the Justice Department said in its statement. “The settlement also does not resolve any consumer claims, claims by the Federal Trade Commission or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation.”
