wednesday, 27 july of 2016

Volkswagen Gets Initial Approval of $14.7 Billion Settlement With U.S. Drivers

A federal judge granted preliminary approval to Volkswagen AG’s $14.7 billion settlement with U.S. drivers of diesel-powered vehicles on Tuesday, clearing the way for the company to put the plan into action and put the emissions scandal behind it.

The German auto maker plans to hire between 250 and 300 people to oversee settlement claims and processing; those workers would be overseen by 40 employees from Volkswagen Group of America, its U.S. business, a company attorney said in court.

The settlement “allows Volkswagen to turn the page and begin to make things right in the United States,” Robert Giuffra, another attorney for the company, said in court in San Francisco, before U.S. District Judge Charles Breyer gave his initial blessing to the deal.

The deal offers drivers of some 475,000 diesel-powered vehicles with 2-liter engines compensation plus the option of either selling back their cars or having them repaired to be compliant with U.S. emissions standards. Volkswagen admitted in September to rigging the vehicles to dupe emissions testing.

Car owners will be paid additional compensation regardless of which choice they make, of between $5,100 and $10,000, an attorney for plaintiffs reiterated Tuesday. Those with leased vehicles will receive an average of $3,500 in compensation and can terminate their leases.

The settlement still requires final court approval, which could come at a hearing scheduled to take place Oct. 18. Vehicle buybacks are expected to begin as soon as final approval is granted, lawyers said in court.

“It’s all about choice,” lead plaintiffs’ attorney Elizabeth Cabraser said, adding that diesel drivers thought they were making a decision to buy an environmentally friendly vehicle but “were deprived of that choice.”

Apart from the remedies for consumers, the deal also requires Volkswagen to put $4.7 billion toward investment into so-called zero-emission vehicles and into an environmental remediation fund.

Drivers will be notified of options through print mailings, emails, websites, media advertisements and a hotline, attorneys said. Under its deal with the Justice Department, Volkswagen faces steep fines if it doesn’t hit an 85% participation rate by June 2019.

“I want these decisions to be fully informed,” Judge Breyer said. “It’s not a simple settlement.”

The affected vehicles include model year 2009 to 2015 Volkswagen Jettas, 2010 to 2015 Volkswagen Golfs, 2012 to 2015 Volkswagen Passats and Beetles, and 2010 to 2015 Audi A3s. Non-Volkswagen dealers with the diesel cars on their lots also will be able to participate in the deal, Ms. Cabraser said.

Volkswagen is working on a comparable deal to compensate drivers of 85,000 diesel-powered vehicles with 3-liter engines, mainly more expensive luxury models. Joshua Van Eaton, an attorney with the Justice Department, told the court that regulators are working closely with Volkswagen on a technical fix and should have more information on those vehicles at an Aug. 25 hearing.

Volkswagen still faces a U.S. criminal probe over the emissions scandal and potential civil and criminal penalties.

New York Attorney General Eric Schneiderman recently lobbed his own lawsuit against the company. The suit, seeking up to $450 million in civil penalties for alleged violations of state environmental laws, claims Volkswagen’s emissions cheating dates back more than a decade and arose from deliberate efforts by employees to mislead consumers and regulators.

(Published by The Wall Street Journal - July 26, 2016)

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