VW, Dealers Propose Emissions-Cheating Settlement

  • Carmaker offers to buy back cars as in separate consumer deal
  • Two-thirds of 2-liter diesel owners in U.S. accept terms

Volkswagen AG is asking a judge to approve its $1.2 billion agreement with its U.S. dealerships for losses caused by its emissions-cheating scandal.

The proposed settlement increases the amount VW will pay to resolve U.S. lawsuits over its emissions-cheating vehicles to $16.5 billion. VW is offering to buy back vehicles from its 652 dealerships under the same terms as those given consumers, according to a filing Friday in San Francisco federal court by attorneys for the dealers.

VW admitted last year to systemically rigging environmental tests to hide its diesel emissions. U.S. District Judge Charles Breyer is slated to consider the settlement on Oct. 18, along with the $15.3 billion pact with consumers and U.S regulators that’s awaiting his final approval. Breyer signed off this month on VW’s $86 million agreement with the state of California to resolve unfair competition claims related to the scandal.

More than 65 percent of the 475,000 U.S. owners of diesel-cheating cars with 2.0-liter engines covered by the consumer settlement have registered to participate in it. Only 3,298 have said they won’t join in the class-action agreement, preserving their right to fight VW in court separately, according to a court filing Friday. Other car owners have until September 2018 to decide whether to accept the terms of the deal.

VW issued a statement Friday acknowledging the dealer accord was filed with Breyer.

While the company moves toward resolving a mountain of litigation over the cheating, it hasn’t offered a fix acceptable to regulators for 562,000 rigged diesel vehicles still polluting U.S. roads. That includes vehicles with 3.0-liter engines. The pact with consumers requires VW to fix or get 85 percent of the 2-liter cars off U.S. roads by June 2019 to avoid further penalties.

Dealers Angry

Dealers were angry because they invested heavily in new, large stores in hopes of seeing the brand sell 800,000 vehicles a year, a goal set by former VW Chief Executive Officer Martin Winterkorn. The carmaker’s namesake brand sold 349,440 cars and light trucks in the U.S. last year.

The company has earmarked 18 billion euros ($20.22 billion) to cover the fallout from the scandal. Most of the 11 million cars equipped with the defeat devices were sold in Europe, where a fix for some of the cars has been approved.

The U.S. case is In Re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, MDL 2672, U.S. District Court, Northern District of California (San Francisco).

— With assistance by David Welch

(Corrects timing of admission in third paragraph and details in sixth in story originally published Sept. 30.)
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