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US judge approves Volkswagen emissions settlement

Published 25/10/2016

About 475,000 US owners of VWs and Audis with two-litre four-cylinder diesel engines now will be able to seek buybacks of their vehicles
About 475,000 US owners of VWs and Audis with two-litre four-cylinder diesel engines now will be able to seek buybacks of their vehicles

A US federal judge has approved a 15 billion dollar (£12 billion) court settlement of most claims against Volkswagen over its emissions-cheating scandal.

District judge Charles Breyer signed the order in San Francisco, approving the largest car scandal settlement in American history.

About 475,000 owners of VWs and Audis with two-litre four-cylinder diesel engines will now be able to seek buybacks of their vehicles, starting next Tuesday.

Most of the owners are expected to sell their cars back to VW after the company acknowledged cheating on emissions testing.

In addition to having their cars bought back, owners can expect to receive payments of 5,100-10,000 US dollars (£4,100-£8,100).

Judge Breyer wrote: "The settlement is fair, reasonable and adequate."

VW will pay legal fees and costs, including up to 324 million dollars (£265 million) in fees and 8.5 million dollars ( £6.9 million) in out-of-pocket costs.

While the settlement releases legal claims from most of the two-litre VW owners, it does not affect larger three-litre six-cylinder diesels, which also cheated on tests.

The settlement also does not end any claims against parts supplier Robert Bosch, which drew up the cheating software.

Judge Breyer gave preliminary approval to the settlement in July. The order says that 336,612 owners of two-litre diesels have registered for the settlement and 3,298 have opted out.

VW must make payments available within 10 business days from Tuesday, according to the order.

Judge Breyer wrote that the priority was to get the cars off the road as soon as possible, and the settlement accomplishes that.

The polluting cars emitted as much as 40 times the allowable limit for nitrogen oxide, a gas which can cause human respiratory problems.

The settlement calls for the German car giant to spend up to 10 billion dollars (£8.1 billion) to buy back or repair the affected cars.

The company will buy back the cars at the US National Automobile Dealers' Association clean trade-in price before the cheating was made public on September 18 2015.

Some owners have objected, saying they should receive the full purchase price of their vehicles.

Mark Dietrich, an Audi owner from San Francisco, told the judge last week that Volkswagen played owners for fools and the settlement did not go far enough to compensate them for the company's fraud.

But Volkswagen attorney Robert Giuffra encouraged Judge Breyer to approve the deal, saying it was good for buyers and would help the company regain people's trust.

The settlement also includes 2.7 billion dollars (£2.2 billion) for unspecified environmental mitigation and an additional two billion dollars (£1.6 billion) to promote zero-emissions vehicles.

The scandal has damaged Volkswagen's reputation and hurt its sales. The company is still facing potentially billions more in fines and penalties and possible criminal charges.

The company said in April that it has set aside 18.2 billion dollars to cover the cost of the global scandal, which erupted in September 2015 when the US environmental protection agency (EPA) said Volkswagen had fitted many of its cars with software to fool emissions tests.

Car owners and the US department of justice sued.

The software recognised when the cars were being tested on a treadmill and turned on pollution controls. The controls were turned off when the cars returned to the road.

The EPA alleged the scheme let the cars spew more than 40 times the allowable limit of nitrogen oxide.

Through September of this year, VW Group's sales in the US are down nearly 7% from 2015 figures to just under 386,000.

The Volkswagen brand fared worse, with sales down 12.5% to just over 231,000, according to Autodata.

The VW group includes the Audi, VW, Bentley and Lamborghini brands.

AP

Press Association

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