Last September, VW were investigated by the Environmental Protection Agency (EPA) under suspicion of essentially cheating emissions tests. Now dubbed the “diesel dupe”, the investigation essentially found that many VW cars being sold in America had a ‘defeat device’ – or software – in their diesel engines that could detect when they were being tested. This allowed the engine to alter the performance accordingly in order to improve results.
In the months that followed there were hundreds of reports stating various levels of guilt by the car giant. However since then, VW has admitted to cheating the tests in the US, which has caused a ripple effect for the company, with its shares being hit drastically, despite trying to move past the scandal and promising to sort out the issues.
However, almost a year after first being investigated, VW has agreed on a $14.7 billion settlement with US authorities for those customers affected by the emissions scandal. The figure, which equates to more than £11 billion, will give every owner of a 'defeat device', the option to sell back their car to the company at pre-scandal values.
The settlement is made up of a pool of more than $10 billion to cover the 2.0 litre litre TDI settlements, $2.7 billion as an environmental remediation fund, and $2 billion in initiatives to promote the use of zero-emission vehicles – such as electric cars – in the US. Having been agreed with the likes of the United States Department of Justice, it is certain to kick VW into shape and is almost guaranteed to stop the manufacturer from pulling such tricks in the future.
This settlement will affect around 499,000 vehicles in America which were fitted with an emissions cheating defeat device software. All of the models featured a 2.0 litre TDI diesel engine, and is split approximately between 460,000 VW and 15,000 Audi cars.
In addition, VW has also agreed a further $603 million in order to resolve any existing or potential consumer claims for 44 US states, the District of Columbia and Puerto Rico.
The sell back option means that customers can either choose to sell back their vehicle or terminate their lease without penalty under the agreement with US authorities. However if customers prefer, and it is approved, they can have their car modified free of charge and keep it. No matter which option customers choose, they will also receive a cash payment from VW as a means of compensation.
The value of the cars will be determined by America's NADA Used Car Guide, published in the September 2015 edition.
The car manufacturer will also pay around $600 million in fees to the National Association of Attorneys General in order to cover costs and expenses related to the Scandal. Aside from the scandal involving 2.0 litre TDI models, there was also an issue around 3.0 litre TDI engines. And these issues will be settled on separately.