US court agrees $15 billion VW settlement

Published: October 26, 2016

Updated: July 24, 2018

Author: Luke Jones

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The extent of damage caused to Volkswagen (VW) in the wake of last year’s emissions scandal is starting to be felt. While the case against the German automaker is still before Canadian courts, the U.S. courts have made their decision. A federal judge in San Francisco has agreed to allow a settlement between VW and lawmakers to go through.

Volkswagen will now pay a near $15 billion court settlement to end the claims against the company. U.S. District Judge Charles Breyer signed the order Tuesday, effectively settling the largest auto scandal in history. It is worth noting that VW still faces numerous similar cases around the world, including in Canada, where a class-action lawsuit is currently before the Ontario Supreme Court.

Last year, the company confessed to rigging its cars to give false emissions readings when being tested by regulators. The affected 2-liter four-cylinder diesel engines were actually found to be pumping out emissions far in excess of what is allowed.

As well as the court payout, Volkswagen also has to fix affected cars or buy them back from owners. Individuals have until Sept. 2018 to decide what they want to do, but vehicle repurchases could start as soon as next month. As well as buying cars back, VW has to pay owners a cash settlement of between $5,100 and $10,000.

Volkswagen admitted last year that about 475,000 VWs and Audis with 2-litre four-cylinder diesel engines were programmed to cheat on emissions tests. Under the settlement, owners of the affected cars have until Sept. 1, 2018, to decide whether to have the car fixed or repurchased. Volkswagen could start buying back the cars as early as next month if the owner submits a claim.

Most of the owners are expected to sell their cars back to VW after discovering they exceed U.S. emissions standards in real-world driving conditions. In addition to having their cars bought back, owners can each get cash payments of $5,100 to $10,000. The cost of the repurchase and fix program will cost the company $10 billion.

“The settlement is fair, reasonable and adequate,” Breyer wrote in his order, posted Tuesday morning by the court.

VW will pay attorney fees and costs, including up to $324 million.