VW Starts the Cleaning Process.
The lingering question of what would be the final outcome of the Volkswagen scandal has finally been answered. Today, a federal judge in San Francisco has approved a nearly $15 billion court settlement, the largest auto-scandal settlement in history, for a majority of claims against VW.
The deal will provide buy-backs for approximately 475,000 owners of VWs and Audi’s with 2 liter diesel engines. Owners of affected diesel cars will receive between $12,500 and $44,000 from the automaker to buy back their cars. Implementation of the buy-backs will start immediately with VW hiring 900 employees in order to have at least one employee at each of its 652 dealerships. As an alternative to a buy-back, VW owners can chose to have their vehicles repaired to meet emissions standards, despite the fact that no standard officially exists on what such a repair would entail. Nor is it clear the extent to which emissions modifications may reduce performance.
Owners, whether choosing buy-back or modification will receive a cash payment of at least $5,100 to as much as $10,000. In addition, VW will pay $2.7 billion into a trust account to support environmental programs.
This settlement does not cover 3.0-liter diesel engines as all parties are still negotiating a potential settlement for those vehicles.
VW has a website with details on the settlement at www.vwcourtsettlement.com
Fallout:
The scandal has had numerous impacts on Volkswagen, including its parent company, Volkswagen Audi Group. Sales of VWs in the U.S. were down 12.5% for the first 9 months of the year while other brands, Audi and Porsche fell 6.1%.
Rumors are also circulating in the European Automotive press that the cost-cutting of VW brands may kill off production of the Audi R8 and reshuffle the underlying platforms of various Audi models. Autocar magazine reports that Audi will also not receive a planned research center at its headquarters and will also not receive a new wind tunnel and crash test facility. This is also coupled with rumors that Audi may pull out of endurance racing after 2017.
The landscape of automotive technology is changing as car makers must move to more fuel efficient and all electric vehicles that will still have to satisfy our thirst for performance. VW has its work cut out for itself. All it has to do now is hemorrhage billions of dollars, make its customers whole (or whole enough), repair its sullied image and get back to work competing with the rest of the world's automakers to make innovative products we want to buy. We'd wish them luck, but they need more than luck at this point.