A federal judge has approved a $14.7 billion settlement in the Volkswagen emissions-cheating case, the largest auto-scandal settlement in U.S. history.
The deal, approved Tuesday, gives about 475,000 owners of Volkswagens and Audis with 2-liter diesel engines the opportunity to have their cars bought back or modified by Volkswagen and to seek additional cash compensation.
U.S. District Judge Charles Breyer in San Francisco, who has overseen the litigation against the German automaker, approved the settlement that was proposed in July. He called the deal "fair, reasonable and adequate."
The VW scandal erupted a year ago when Volkswagen admitted that it had installed "cheat devices" on diesel-powered cars from 2009 through 2015. The devices enabled the vehicles' engines to emit less pollutants during emissions tests than during normal road use.
The scandal involved nearly 600,000 cars in the United States and 11 million Volkswagen vehicles worldwide.
Volkswagen said Tuesday that it would start to implement the U.S. settlement immediately and that it was hiring 900 people to help with the buybacks, including one employee to be stationed at each of its 652 U.S. dealerships.
The automaker also has a website, www.vwcourtsettlement.com, with details about the settlement and instructions for people who own or lease affected cars. Terms of the settlement and a list of the vehicles involved also are available at on the court's website.
The settlement "is an important milestone in our journey to make things right in the United States," Hinrich Woebcken, chief executive of Volkswagen Group of America Inc., said in a statement.
Under the settlement, owners of certain 2-liter diesel cars made by Volkswagen in the model years 2009 through 2015 will receive between $12,500 and $44,000 from the automaker to buy back their cars. Leases of those vehicles may be terminated without penalty, and leaseholders also may seek cash payments.
Instead of having their cars bought back, drivers can choose to have VW modify their vehicles to meet emissions standards _ once that method is approved by the California Air Resources Board and the Environmental Protection Agency. Federal officials said such a modification does not yet exist, though the company is working on a fix.
Regardless of whether they choose the buyback or modification option, owners will also receive a cash payment of at least $5,100 and as much as $10,000, depending on the model.
The 475,000 cars affected by the agreement include Volkswagen's popular Beetles, Golfs, Jettas and Passats. Some Audi A3s also are covered.
The agreement does not cover about 90,000 cars with 3-liter engines that also had the cheating software. Volkswagen, regulators and consumers' lawyers are still negotiating a possible settlement for those vehicles.
Volkswagen overall is to spend up to $10 billion to buy back or modify the VW and Audi 2-liter diesel vehicles in the United States. The final figure depends on how many car owners take advantage of the offer.
Volkswagen also will pay $2.7 billion into a trust to support environmental programs and reduce emissions, as well as shell out $2 billion over a 10-year period to invest in and promote zero-emissions vehicles.
The automaker reached three separate but related settlements: the first with the U.S. Department of Justice, the California attorney general's office, the California Air Resources Board and the EPA; the second with the Federal Trade Commission; and the third with owners. The agreements were developed in parallel.
The settlement "sets in motion a public process that will develop a range of projects to mitigate the harmful health effects of smog," Mary Nichols, chairwoman of the California Air Resources Board, said in a statement.
Elizabeth Cabraser, the court-appointed lead counsel for the VW consumer plaintiffs, said "we are very pleased that the court has granted final approval to this historic settlement that holds Volkswagen accountable for its illegal behavior and breach of consumer trust."
She said in June that before customers choose to have their vehicles fixed instead of opting for the buyback, they will be notified with full disclosure of any potential effects on fuel efficiency and vehicle performance.
Late last month, Volkswagen agreed to pay its U.S. dealers up to $1.2 billion to compensate them for losses suffered as a result of the emissions cheating scandal.
The dealers are expected to receive about $1.85 million each, but they can choose to opt out of the deal and pursue their own lawsuits against Volkswagen. A judge still has to approve that settlement before it can go into effect.
