A Federal judge has just approved Volkswagen’s settlement over the recent vehicle emission’s scandal. Under the terms of this settlement—valued at $14.7 billion—Volkswagen has agreed to collaborate with US car owners to either buy back, directly, the affected vehicles or to repair the vehicles affected by the scandal. This will involve paying owners as much as $10.033 billion; and the carmaker must also pay the United States an environmental remediation penalty worth nearly $5 billion.
Announced Tuesday, it is still a tentative deal but US District Judge Charles Breyer did say that he found it to be “fair, adequate, and reasonable.”
The next step, then, is for the roughly 475,000 Volkswagen owners in the US to choose choose between returning the vehicle for a refund or to have the error repaired for free (with additional compensation). As such, VW will begin administering the settlement as soon as possible, as they have already tasked several hundred employees to begin handling the process.
Breyer comments, “The priority was to get the polluting cars off the road as soon as possible. The settlement does that,” adding that even “under heightened scrutiny” this deal is quite appropriate.
Those who opt for the buyback could receive between $12,475 and $44,176, which includes restitution payments. The variance will depend on the mileage of each vehicle. Those who opt instead for a fix (and compensation) can find a shop approved by the US Environmental Protection Agency. These owners will receive compensation payouts between $5,100 and $9,852, with the variance depending on the car’s book value.
In addition, Volkswagen will also have to pay $2.7 billion for environmental mitigation as well as another $2 billion for clean-emissions infrastructure (making up the second $5 billion in penalties).
In all, VW’s settlement payout is one of the largest in corporate history, perhaps only exceeded by the $246 billion settlement between the tobacco industry and the United States (in 1998) as well as the $38 billion BP Plc spent, so far, on the Gulf of Mexico oil spill, from 2010.
Accordingly, St. John’s University law professor Anthony Sabino, of New York, says, “VW got itself in a lot of trouble on both sides of the Atlantic, basically lying to a host of governmental regulators, its ultimate customers and its many dealers in between.” Also an expert on complex litigation, Sabino goes on to say, “They’re not getting off cheap, but they’re stopping the bleeding.”