VWs dieselgate costs are adding up

VW's 'dieselgate' costs are adding up

Volkswagen says it has  reached an agreement with the US Department of Justice (DOJ) on behalf of the Environmental Protection Agency (EPA) and the State of California, by and through the California Air Resources Board (CARB) and the California Attorney General, to resolve civil claims regarding approximately 83,000 affected 3.0L TDI V6 diesel engine vehicles in the US.

The settlement deal covered luxury VW, Audi and Porsche vehicles with 3.0-litre engines, meaning Volkswagen has now agreed to spend as much as USD17.5 billion in the United States to resolve claims from owners as well as federal and state regulators over polluting diesel vehicles.

The agreement, in the form of a proposed Consent Decree, is subject to the approval of Judge Charles R. Breyer of the US District Court for the Northern District of California, who presides over federal Multidistrict Litigation (MDL) proceedings related to the diesel matter in the US. The proposed agreement would allow Volkswagen to recall more than 75% of affected 3.0L TDI V6 vehicles to bring them into compliance with the emissions standards to which they were certified, if appropriate modifications are approved by EPA and CARB.

As disclosed by the Court, Volkswagen has also reached agreement with the Court-appointed Plaintiffs' Steering Committee (PSC) on substantial aspects of the monetary relief that eligible owners and lessees would receive, and the parties are working to resolve the remaining issues. Details of these discussions remain subject to a confidentiality order of the Court. The Court has scheduled a status conference on Thursday 22 December at 11am PT for the parties to report on progress towards a resolution and set a deadline of 31 January 2017 for the parties to submit a formal agreement to the Court.

"The agreement announced by the Court today between Volkswagen and U.S. environmental regulators is another important step forward in our efforts to make things right for our customers, and we support the efforts of the Court to bring about a fair and reasonable resolution of remaining 3.0L TDI V6 claims as quickly as possible," said Hinrich J. Woebcken, president and CEO of Volkswagen Group of America, Inc. "We are committed to earning back the trust of all our stakeholders and thank our customers and dealers in the US for their patience as the process moves forward."

Under the terms of the proposed Consent Decree, Volkswagen has agreed to:

  • Recall approximately 63,000 affected 2013-2016 Model Year Volkswagen, Audi and Porsche 3.0L TDI V6 vehicles with so-called Generation 2 engines to bring them into compliance with the emissions standards to which they were certified, if appropriate modifications are approved by EPA and CARB. If Volkswagen is unable to meet this requirement, it will offer to buy back or terminate the leases of these vehicles and may also seek approval by EPA and CARB to offer customers a modification to substantially reduce their nitrogen oxide (NOx) emissions.
  • Buy back or terminate the leases of approximately 20,000 affected 2009-2012 Model Year Volkswagen and Audi 3.0L TDI V6 vehicles with so-called Generation 1 engines or, if approved by EPA and CARB, modify the vehicles to substantially reduce their NOx emissions so as to allow eligible owners and lessees to keep them.
  • Contribute US$225m to the environmental remediation trust that is being established under Volkswagen's 2.0L TDI settlements in the US to fully mitigate the lifetime NOx emissions of the affected 3.0L TDI V6 vehicles.
  • As part of its agreement with the State of California, Volkswagen will also pay $25m to CARB to support the use of zero emissions vehicles (ZEVs) in the State.

The terms of the proposed agreement will be effective and final only after approval by the Court. At the earliest, approval will occur during spring of 2017. Affected 3.0L TDI V6 customers do not need to take any action at this time, and can visit www.VWCourtSettlement.com for more information.

VW stressed that its latest actions are US focused and designed for that market only. It said the agreement is "not intended to apply to or affect Volkswagen's obligations under the laws or regulations of any jurisdiction outside the US". Regulations governing NOx emissions limits for vehicles in the US are much stricter than those in other parts of the world and the engine variants also differ significantly, the company added. This makes the development of technical solutions in the US more challenging than in Europe and other parts of the world, where implementation of an approved program to modify TDI vehicles to comply fully with UN/ECE and European emissions standards has already begun by agreement with the relevant authorities.