Volkswagen hit with $14.7bn cost of bringing US cars up to code
Volkswagen has agreed to spend $14.7bn (€13.3bn) to get hundreds of thousands of emissions-cheating diesel vehicles off US roads and placate regulators, in settlements that set a US motor industry record but still leave VW facing criminal and civil complaints on three continents. Under the agreement announced yesterday, which still requires a judge's approval, car owners will have the choice of having Volkswagen buy back their vehicles or install whatever pollution-control retrofit is eventually accepted by regulators.
In either case, the owners will get $5,100 to $10,000 each in additional compensation. Some leaseholders will receive roughly half those amounts.
VW will also have to pay $2.7bn to federal and California regulators for a trust to fund pollution-reduction projects and also make a $2bn investment in clean technology.
"This historic agreement holds Volkswagen accountable for its betrayal of consumer trust," said Elizabeth Cabraser, the lead counsel for the plaintiffs.
The settlement marks a swift resolution between VW and the US, after the carmaker admitted last September to systematically rigging environmental tests since 2009 to hide that its diesel vehicles were emitting far more pollutants than allowed under US and California law.
The record settlement raises questions about whether VW will need to devote more than the €16.2bn it has set aside to cover the cost of repairs, fines and legal fees.
"It will take a long time to determine the full cost of the scandal," said Frank Biller, a Stuttgart-based analyst at LBBW Bank, who estimates the total price tag could exceed €26.5bn, including potential litigation costs in other countries. (Bloomberg)