WASHINGTON: German automaker Volkswagen AG will pay as much as US$15.3 billion after admitting it cheated on US diesel emissions tests for years, agreeing to buy back vehicles from consumers and provide funding that could benefit makers of cleaner technologies.
The largest-ever automotive buyback offer in the United States came in a deal announced on Tuesday by the Justice Department, Federal Trade Commission, Environmental Protection Agency and California state regulators. The proposed consent decree confirmed that VW will set aside US$10.033 billion to cover buybacks or fixes for diesel cars and sport utility vehicles that used illegal software to defeat government emissions tests.
VW admitted in September that it installed secret software that allowed US vehicles to emit up to 40 times legally allowable pollution. VW still may face criminal charges and oversight by an independent monitor, a person briefed on the matter said.
A criminal settlement could include measures to ensure VW would not engage in further cheating.
"We didn't follow a multiyear, grind-it-out litigation strategy, which would have been counterproductive for Volkswagen," said Robert Giuffra Jr., VW's lead lawyer. "We moved with lightning speed to settle with our federal and state regulators and the private plaintiffs."
Under the Justice Department deal, VW will provide US$2 billion over 10 years to fund programs directed by California and EPA to promote construction of electric vehicle charging infrastructure, development of zero-emission ride-sharing fleets and other efforts to boost sales of cars that do not burn petroleum.
VW also agreed to put up US$2.7 billion over three years to enable government and tribal agencies to replace old buses or to fund infrastructure to reduce diesel emissions.
The settlement covers 475,000 2.0-litre diesel Jetta, Beetle, Audi A3, Golf, and Passat vehicles from the 2009-2015 model years.
VW also announced a separate settlement with 44 US states, the District of Columbia and Puerto Rico that will cost at least US$600 million, bringing the total to as much as US$15.3 billion.
Deputy US Attorney General Sally Yates said a criminal investigation remained active. "We're looking at multiple companies and multiple individuals," she said.
"By duping regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment," she added.
The EPA is investigating other automakers for potential emissions problems. EPA Administrator Gina McCarthy said the agency "will be releasing information as it becomes available."
VW still faces criminal investigations in Germany and other countries, and lawsuits from investors around the world.
Europe's Industry Commissioner Elzbieta Bienkowska called on Volkswagen to also compensate European drivers.
Bienkowska said it would be unfair for VW diesel car owners in Europe to be treated differently just because of a different legal system.
"European consumers have been cheated in the same way as US customers, so it is only fair to offer comparable compensation without hiding behind legal arguments," Bienkowska said in an emailed statement.
"I remain convinced that the best way to restore consumer trust is to treat them fairly, without the need for class action threats," she said.
Bienkowska is echoing calls by consumer groups and lawyers whose chances of winning compensation from VW in Europe are diminished by the lack of mechanisms available to marshal complaints such as US-style class-action lawsuits, as well as the fact that the rules on diesel emission-control devices are less stringent.
VW has rejected such calls, saying car owners in Europe will not suffer a loss of value in their cars as VW is implementing steps approved by regulators to remove the illicit software from the vehicles in a campaign that so far has involved about 3.7 million of 8.5 million affected vehicles in the region.
"The situation in the US is not comparable to Germany and Europe," a VW spokesman said.
