Volkswagen in initial $15bn US settlements over rigged vehicles

The German car manufacturer Volkswagen (VW) is to spend $14.7bn in two US settlements to settle allegations of cheating emissions tests and deceiving customers on its two-litre diesel vehicles.

One settlement is with the US and the State of California, and another is with the US Federal Trade Commission (FTC). They will see VW offer to buy back and cancel leases on around 500,000 two-litre diesel vehicles, seeing the company set aside up to $10bn to compensate consumers. It has also agreed to spend $4.7bn to help mitigate the pollution from the cars and invest in low carbon vehicle technology.

The settlements go some way to resolving the allegations of the US Environmental Protection Agency (EPA) as well as the California Air Resources Board under the Clean Air Act and Californian legislation relating to the uncovered use of ‘defeat devices’ in the vehicles to cheat emissions tests – resulting in higher than expected real world emissions. They also resolve claims from the FTC on deceptive and unfair advertising.

However, as the EPA points out, the settlements do not resolve pending claims for civil penalties or also those relating to the company’s three-litre vehicles. They also do not address any potential criminal liability.

The affected vehicles include 2009 to 2015 Volkswagen TDI diesel models of Jettas, Passats, Golfs and Beetles as well as the TDI Audi A3.

‘By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our atmosphere,’ said US Deputy Attorney General Sally Q Yates in relation to the news. ‘This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust.’

Some analysts have said that the carmaker could pay up to $30bn to various US agencies. Volkswagen has said that a similar compensation scheme in Europe would be inappropriate and unaffordable. Instead the company is refitting its European cars.