Motor Vehicles

Volkswagen’s $1.22 Billion Repair and Buyback Plan Gets Preliminary Approval

VW consumer fraud 375x210 Volkswagen’s $1.22 Billion Repair and Buyback Plan Gets Preliminary ApprovalA federal judge granted preliminary approval Feb. 14 to a $1.22 billion plan for German automaker Volkswagen to repair or buy back about 80,000 3.0-liter diesel vehicles in the U.S. that are equipped with an emissions cheat that allows them to spew illegal levels of pollution.

The deal follows an earlier agreement requiring Volkswagen to spend as much as $10.3 billion to fix or buy back nearly half a million 2.0-liter diesel vehicles equipped with the same emissions-cheating software that allows them to emit as much as 40 times the allowable limits of toxic air pollutants.

U.S. Judge Charles Breyer in San Francisco also agreed to grant preliminary approval to a separate agreement requiring German auto supplier Robert Bosch GmbH to pay $327.5 million to U.S. owners of vehicles affected by the emissions cheat scandal. VW diesel car owners claim that Robert Bosch was a “knowing and active participant” in the emissions cheat scandal because it allegedly helped design the secret “defeat device.”

The agreement reached last week, to which Judge Breyer will consider granting final approval on May 11, and the $10.3-billion deal are the latest in a series of steep financial hits Volkswagen is taking over its emissions cheat, which allows vehicles to run without pollution controls unless they are being tested for emissions, in which case software turns on emissions controls.

Volkswagen could spend more than $4 billion if U.S. regulators do no approve of its plan to fix or buy back the 3.0-liter vehicles.

So far, the German automaker has agreed to spend up to $25 billion to settle claims with owners of the affected vehicles, environmental regulators, U.S. states, and dealerships.

Volkswagen continues to face unresolved claims from company investors, U.S. states, affected car owners who opted out of the class-action settlement, and pending investigations by the U.S. Securities and Exchange Commission and German authorities.

The automaker will also plead guilty on Feb. 24 to three felony counts under a plea agreement. Separately, the U.S. has charged seven current and former Volkswagen executives for their alleged roles in the cheat scandal.

Sources:
Reuters
Law360