Volkswagen’s plan to buy back vehicles gets court approval

A $19.2bn settlement in VW’s cheating scandal could get nearly half a million dirty diesel vehicles off US roads.

A US court has approved a deal that could get nearly half a million cars off the road after Volkswagen’s emissions scandal. Picture: AFP Photo/Paul J. Richards.

Volkswagen received final court approval Tuesday of a $US14.7 billion ($19.2bn) deal reached with consumers and government agencies that could get nearly half a million dirty diesel vehicles off US roads.

The deal offers drivers of 475,000 Volkswagen diesel-powered vehicles with 2-liter engines the option of selling back their cars to Volkswagen or waiting for a government-approved fix that would allow the cars to stay on the road. The deal, which sets aside up to $US10.033 billion for consumers, also offers additional cash payments of between $US5,100 and $US10,000 per person.

Volkswagen said last year that it equipped diesel-powered cars with devices meant to trick emissions tests, allowing the cars to spew higher-than-legal levels of pollutants. The company’s president and chief executive of the Americas, Hinrich Woebcken, said Tuesday the approval by US District Judge Charles Breyer “is an important milestone in our journey to making things right in the United States” and that the company is committed to carrying out the program “as seamlessly as possible” for consumers.

Elizabeth Cabraser, lead lawyer for US consumers, said she’s pleased by the approval of a “historic settlement that holds Volkswagen accountable for its illegal behaviour and breach of consumer trust.”

Dealerships nationwide can now begin working with consumers to buy back the vehicles, which include Jettas, Golfs, Passats, Beetles and Audi A3s dating back to model year 2009. Ms Cabraser’s team has said that the majority of their clients seem intent to sell back the cars, rather than wait for a fix that could have a negative impact on vehicle performance.

“It’s an unfortunate end to an unfortunate situation,” said Kent Roberts, an lawyer in Buffalo, N.Y. who owns a 2013 Passat. He said he plans to sell it back, despite wishing the buyback price was higher and took into consideration extra costs incurred like sales tax. “The court should have done more for us.”

Consumers still have until September 2018 to make a final decision. Volkswagen will face penalties if 85 per cent of the affected vehicles aren’t sold back or fixed by June 2019.

Judge Breyer indicated at a hearing last week in San Francisco that he planned to approve the deal. The judge has pushed attorneys on all sides for months to reach a quick resolution, and indicated at hearings over the summer that he was in favour of the proposals.

In his order Tuesday, Judge Breyer said the settlement, reached after five months of “intensive” negotiations, “provides benefits much sooner than if litigation were to continue” and reduces the prospect of “additional environmental damage.”

Judge Breyer said in his order that he wasn’t persuaded by various objectors who were unhappy with the dollar amount being offered in the buyback and that setting the price at the cars’ pre-scandal value, with reductions for excess mileage, was fair.

The Tuesday approval also includes an agreement reached between Volkswagen and the US government that requires the automaker to contribute $US2.7 billion over three years into an environmental trust to remediate the pollution caused by the diesel vehicles and invest $US2 billion over a decade into zero-emission vehicles. Judge Breyer said in his order that beneficiaries of the environmental remediation trust could include projects that seek to reduce nitrogen oxide emissions in freight trucks, buses, ferries, or airport ground support equipment.

The US Environmental Protection Agency called Tuesday a “landmark day.”

Still to be determined is how Volkswagen plans to compensate drivers of some 85,000 larger, 3-liter diesel vehicles also impacted by the automaker’s diesel-emissions crisis. Volkswagen is scheduled to update the court on progress on that front next week.

Plaintiffs’ lawyers are set to receive $US175 million for their work on the settlement, according to a person familiar with the matter. That money won’t come out of funds set aside for consumers, and doesn’t include time spent resolving 3-liter claims.

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