Volkswagen has agreed to pay $1.208 billion to dealers in the United States as a settlement over the costs from the diesel emissions scandal. The lawyers representing the showrooms also consent to the deal. The United States District Court for the Northern District of California still needs to grant final approval before the agreement is final, though.

According to Automotive News, the VW brand has 652 dealers in the U.S, which averages out to $1.85 million for each showroom from this agreement. The settlement payment will happen over the next 18 months and will partially include a cash incentive. The automaker will also buy back unsold diesel vehicles and will no longer require certain improvements at the stores.

VW came to an “agreement in principle” with dealers in August, but neither side revealed specifics about the settlement at that time. The showrooms first filed their lawsuit in April because they were no longer able to sell diesel vehicles and because the bad press from the scandal hurt business. Through September, VW moved 231,268 vehicles in the U.S in 2016 – a drop of 12.47 percent through the same period last year.

VW Group is still working with government regulators to avoid a consumer buyback of 85,000 luxury vehicles with the 3.0-liter diesel V6. According to Automotive News, both sides continue to negotiate "a technical solution that reduces the emissions of these vehicles." An Audi exec previously indicated an agreement about fixing these engines could be ready by late October or early November. The Feds already rejected the company's first proposed fix for this problem because the automaker's proposal was “incomplete and deficient in a number of areas."

The company already reached a roughly $15-billion settlement over the defeat devices on the 2.0-liter four-cylinder diesel. The agreement included a $10-billion provision for buying back the affected vehicles. Automotive News reported that 311,000 of the 475,000 total customers already applied to take part in the campaign. The plan also stipulated $2.7 billion in environmental cleanup and $2 billion for improving EV infrastructure. 

Source: Automotive News, Volkswagen


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Sep 30, 2016
Herndon, VA – September 30, 2016 - Volkswagen Group of America, Inc. (“Volkswagen”) today announced that it has finalized an agreement to resolve the claims of VW-branded franchise dealers in the United States relating to TDI vehicles and other matters asserted concerning the value of the franchise.

Under the proposed agreement, Volkswagen has agreed to make a maximum total of $1.208 billion in cash payments to eligible dealers and to provide additional benefits to resolve alleged past, current and future claims of losses in franchise value. The parties announced an agreement in principle on August 25.

The proposed agreement was filed today by the dealers’ counsel with the United States District Court for the Northern District of California and is subject to the approval of Judge Charles R. Breyer, who presides over the federal Multi-District Litigation (MDL) proceedings related to the diesel matter.

By its terms, the agreement is not intended to apply to or affect Volkswagen's obligations under the laws or regulations of any jurisdiction outside the United States, where the legal and factual circumstances relating to TDI vehicles differ.