VW Faces $14 Billion Emissions Settlement
Volkswagen is facing a long road back to recovery after agreeing to spend $14.7 billion to settle consumer lawsuits and government allegations that it rigged hundreds of thousands of cars to cheat U.S. emission standards. Federal regulators called the agreement "historic" on June 28.
The settlement was filed with a U.S. District Court in San Francisco. It calls for Volkswagen to pay more than $10 billion to either buy back or repair about 475,000 2-liter diesel vehicles that were sold between 2009 and 2015 and were built with devices to trick emissions testers. The company also will compensate owners who purchased 2-liter diesels before September 2015 with payments of $5,100 to $10,000, depending on the age of their cars.
In addition, the German automaker will pay $2.7 billion into a federal environmental mitigation trust fund and spend another $2 billion for research on zero-emissions vehicles under the settlement.
The company’s U.S. sales were down from 34,758 cars in May 2015 to 28,779 in May 2016, according to figures reported by Volkswagen. The company says it has sold 125,205 cars in the U.S. so far this year, compared with 144,006 in the period between the beginning of January and the end of May last year.
Federal officials noted the settlement doesn’t address potential criminal charges that could be pursued against Volkswagen officials. The agreement also doesn’t address emissions violations that were found with Volkswagen’s 3-liter diesel vehicles.
Deputy U.S. Attorney General Sally Yates said Volkswagen is being punished for committing "one of the most flagrant violations of our country’s consumer and environmental laws in our country’s history." Yates made clear that Volkswagen is not out of the woods when it comes to potential criminal prosecutions. "We’ll follow the facts wherever they go and we’ll make a determination about whether any companies or any individuals should be charged," she said.
Volkswagen has admitted to programming its diesel cars to trick emissions testers into believing the engines released far less pollution into the air than they actually do, in violation of the federal Clean Air Act. Regulators have said that in normal driving they emitted up to 40 times more smog-causing nitrogen oxide than the legal limit.
Karl Brauer, Senior Analyst at Kelley Blue Book, said Volkswagen "should hold the record for most expensive automotive settlement for quite some time," noting that the company’s settlement is "nearly tenfold the cost of recent payouts by GM and Toyota."
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