The $14.7 billion settlements agreed to by Volkswagen today provide buyback and lease termination deals for nearly 500,000 consumers who bought the company's TDI "Clean Diesel" cars. However, the deals will not be available until this fall.
The affected vehicles include 2009 through 2015 Volkswagen TDI diesel models of Jettas, Passats, Golfs, and Beetles, as well as the TDI Audi A3.
Volkswagen will offer consumers a buyback and lease termination for nearly 500,000 model year 2009-2015 2.0 liter diesel vehicles sold or leased in the U.S., and spend up to $10.03 billion to compensate consumers under the program.
In addition, the companies will spend $4.7 billion to mitigate the pollution from these cars and invest in green vehicle technology.
The settlements require Volkswagen to offer owners of any affected vehicle the option to have the company buy back the car and to offer lessees a lease cancellation at no cost.
Volkswagen may also propose an emissions modification plan to EPA and CARB, and if that plan is approved, it may also offer owners and lessees the option of having their vehicles modified to reduce emissions instead of taking a buyback.
Under the U.S./California settlement, Volkswagen must achieve an overall recall rate of at least 85% of affected 2.0 liter vehicles under these programs or pay additional sums into the mitigation trust fund. The FTC order requires Volkswagen to compensate consumers who elect either of these options.
Volkswagen must set aside, and could spend up to, $10.03 billion to pay consumers in connection with the buyback, lease termination, and emissions modification compensation program. The program has different potential options and provisions for affected Volkswagen diesel owners depending on their circumstances:
Volkswagen must offer to buy back any affected 2.0 liter vehicle at their retail value as of September 2015 -- just prior to the public disclosure of the emissions issue.
Consumers who choose the buyback option will receive between $12,500 and $44,000, depending on their car’s model, year, mileage, and trim of the car, as well as the region of the country where it was purchased.
In addition, because a straight buyback will not fully compensate consumers who owe more than their car is worth due to rapid depreciation, the FTC order provides these consumers with an option to have their loans forgiven by Volkswagen.
Consumers who took out third party loans have the option of having Volkswagen pay off those loans, up to 130 percent of the amount a consumer would be entitled to under the buyback (e.g., if the consumer is entitled to a $20,000 buyback, VW would pay off his/her loans up to a cap of $26,000).
Modifications to emissions system
The settlements also allow Volkswagen to apply to EPA and CARB for approval of an emissions modification on the affected vehicles, and, if approved, to offer consumers the option of keeping their cars and having them modified to comply with emissions standards.
Under this option, as part of an agreement with the Federal Trade Commission (FTC), consumers would also receive money from Volkswagen to redress the harm caused by VW’s deceptive advertising.
Consumers who sold their TDI vehicles after the VW defeat device issue became public may be eligible for partial compensation, which will be split between them and the consumers who purchased the cars from them as set forth in the FTC order.
Find your options
Eligible consumers will receive notice from VW after the orders are entered by the court this fall. Consumers will be able to see if they are eligible for compensation and, if so, what options are available to them, at VWCourtSettlement.com and AudiCourtSettlement.com.
They will also be able to use these websites to make claims, sign up for appointments at their local Volkswagen or Audi dealers, and receive updates.
Consumer payments will not be available until the settlements take effect if and when approved by the court, which may be as early as October 2016.
Consumers were cheated
“Today’s announcement shows the high cost of violating our consumer protection and environmental laws,” said FTC Chairwoman Edith Ramirez. “Just as importantly, consumers who were cheated by Volkswagen’s deceptive advertising campaign will be able to get full and fair compensation, not only for the lost or diminished value of their car but also for the other harms that VW caused them.”
The FTC sued Volkswagen in March, charging that the company deceived consumers with the advertising campaign it used to promote its supposedly “clean diesel” VWs and Audis, which falsely claimed that the cars were low-emission, environmentally friendly, met emissions standards, and would maintain a high resale value.
The settlements use the authorities of both the EPA and the FTC as part of a coordinated plan that gets the high-polluting VW diesels off the road, makes the environment whole, and compensates consumers.
The $14.7 billion settlements agreed to by Volkswagen today provide buyback and lease termination deals for nearly 500,000 consumers who bought the company...