A buyback of emissions-cheating cars was one solution Volkswagen offered in federal court Thursday, outlining an agreement between the carmaker and the Justice Department over hundreds of thousands of diesel vehicles that were sold in the U.S. despite not meeting pollution standards.
Car owners would be able to choose between having their vehicle fixed or accepting a buyback; financial details weren't revealed about the plan, which both the government and VW are calling an "agreement in principle."
After VW's plan was announced in San Francisco this morning, Justice Department spokesman Wyn Hornbuckle said:
"This agreement in principle addresses one important aspect of the department's pending case against VW, namely what to do about the 2-liter diesel cars on the road and the environmental consequences resulting from their excess emissions. The department's other investigations into VW's conduct remain active and ongoing."
While the deal's terms weren't discussed in the hearing, Senior District Judge Charles R. Breyer did say consumers deserve "substantial compensation." And the details that emerged bolster a report from Reuters earlier today, which said the owners of nearly 500,000 cars with 2.0-liter engines could receive an offer to buy back those Jettas, Beetles and other vehicles.
"Breyer ordered that the details of the agreement remain confidential until it is finalized — likely sometime this summer," NPR's John Ydstie reports for our Newscast unit. "The judge also said drivers who have leased the vehicles in question will be able to end those leases."
Calling the deal "an important step on the road to making things right," Volkswagen issued a statement saying, "As noted today in court, customers in the United States do not need to take any action at this time."
Nearly 600,000 VW-made vehicles sold in the U.S. have "defeat devices" that circumvent emission control systems during driving conditions – and activate the controls only during emissions tests, the government says. Found in both 2.0-liter and 3.0-liter versions of VW and Audi diesel cars, the problem is present in millions of cars worldwide.
Before the court session, German newspaper Die Welt had reported that Volkswagen might pay American consumers $5,000 in compensation. That possibility wasn't discussed in court today.
Money for the U.S. restitution effort would presumably come out of the $7 billion emergency fund that Volkswagen created to cope with fallout from the scandal.
One attorney who monitored today's hearing is Tom Young, who's suing Volkswagen on behalf of the environmental protection commission in Hillsborough County, Florida. In an email, he notes that the plan unveiled today "does not include damages that may be levied against VW by the many state and local governments that have sued the automaker."
Young adds, "Those governmental entities are seeking additional billions from Volkswagen."
Frustrated by the lack of progress on a recall and restitution, the Environmental Protection Agency filed a lawsuit against Volkswagen back in January.
If the agreement takes hold, it would be an important step in resolving a scandal that erupted last fall, when the EPA said VW had manipulated its diesel engines so they would pass would pass emissions test, despite producing up to 40 times the pollution allowed under U.S. standards.
This week, the district court in Northern California has been issuing summons related to dozens of lawsuits car owners have filed against Volkswagen since last fall.
As an example, one suit was filed by a couple who live in Big Bear, Calif., and who say they bought a 2010 Jetta "because they thought it was environmentally safe and provided good fuel efficiency" and because Volkswagen had advertised the car's use of "clean diesel."
"In reality, the Vehicle did not meet the applicable EPA and ARB emissions standards," the suit states.
Saying the carmaker won't be able to fix the car without compromising its performance and/or fuel efficiency, the lawsuit seeks damages in the form of either the original purchase price or the overpayment amount, along with attorney's fees and "a civil penalty of two times Plaintiffs' actual damages," citing state law.
As we reported when the scandal exploded back in September:
"The U.S. government also has reason to feel duped: Volkswagen's "clean diesel" TDI engines earned a $1,300 federal tax credit for people who purchased a Jetta sedan or wagon back in 2009, the first year affected by the recall.
"When applied to a base price of around $22,000, the hefty tax credit helped explain why the TDI vehicles were hard to keep in stock."
News of an agreement emerged more than a month after Volkswagen's top U.S. executive, Michael Horn, resigned from the company. It was Horn who endured a grilling about the emissions scandal on Capitol Hill last October, in a candid appearance that included an apology and the statement about the cheating software, "It was installed for this purpose."
Since the scandal began, it has also widened to include more Volkswagen and Audi vehicles, as well as one produced by Porsche. Here's the most current list of vehicles, via the EPA:
Affected 2.0 liter diesel models and model years
Affected 3.0 liter diesel vehicle models and model years
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