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Judge OKs VW Diesel Buybacks

2010 Volkswagen Jetta SportWagen

CARS.COM — If you’ve been waiting to unload your recalled Volkswagen 2.0-liter diesel, the wait is over. Those waiting for a fix so they can keep the car remain in limbo, however.

Federal District Court Judge Charles Breyer gave final approval today to the proposed settlement by Volkswagen for cheating on emissions with its 2.0-liter four-cylinder diesels. Volkswagen said the buyback program for the cars will “begin immediately,” with online claims signups here or by phone at 844-982-5246.

Related: Thinking Buyback? Replace Your Volkswagen TDI With One of These

The approval order follows a three-hour hearing on Oct. 18 at which the judge heard objections to the preliminary settlement among Volkswagen Group, U.S. and California environmental and trade regulators, 44 states, and class-action attorneys representing almost all affected VW owners and lessees. He rejected the objections.

“Volkswagen is committed to ensuring that the program is now carried out as seamlessly as possible for our affected customers and has devoted significant resources and personnel to making their experience a positive one,” said Hinrich Woebcken, CEO of Volkswagen Group of North America, in a statement. The transactions will take place at VW dealers and Robert Giuffra, VW’s lead attorney, said at the earlier hearing that every dealer will have a person assigned to the settlement.

“We are very pleased the Court has granted final approval to this historic settlement that holds Volkswagen accountable for its illegal behavior and breach of consumer trust,” said Elizabeth Cabraser, lead attorney for the class-action plaintiffs’ committee, in a statement.

The deal calls for VW to pay as much as $14.7 billion to settle the violations by about 475,000 VW and Audi 2.0-liter four-cylinder diesel cars from the 2009 through 2015 model years. VW admitted that the engines had software that activated controls during emissions testing but turned them off on the road, allowing the cars to emit up to 40 times the legal limit of nitrogen oxide.

The bulk of the settlement, up to about $10 billion, will go to buy back the recalled cars or to pay restitution and fix them, if a fix ever is approved. Owners opting for the buyback will get the trade-in value as of September 2015 plus a restitution payment on a sliding scale based on their car. The judge in his order noted that the settlement gives owners total payments of about 112.6 percent of their vehicle’s value as of September 2015. 

There are separate provisions for lessees, loan forgiveness and owners who sold or wrecked their vehicles since that time.

Owners, including Cars.com, have until September 2018 to decide whether to take the buyback offer or to take a restitution payment and have their cars repaired, but no fix yet exists. Negotiations continue among VW, EPA and the California Air Resources Board, and a complete fix for all cars may not be possible. The deal gives Volkswagen up to two years to come up with approved remedies.

Well over half of the owners and lessees have signed up to take the cash. Updated details regarding the settlement and registration for the buyback are on a VW site here. Information on the buyback process is here and the repair process is here. Payments for owners are outlined in tables here and for lessees here.

The deadline for owners to opt out of the class-action settlement and pursue separate legal action passed on Sept. 16; Cabraser said Oct. 18 that just 3,200 people had opted out of the class settlement and that some of those have returned. 

VW also will pay nearly $5 billion into two funds, $2.7 billion to finance federal and California pollution mitigation campaigns, and another $2 billion to support zero-emission vehicles, as with electric car charging stations. Additionally, about $600 million was set aside to settle state claims.

The deal does not resolve similar emissions violations by the 3.0-liter V-6 diesels in more than 80,000 larger vehicles from Volkswagen Group’s VW, Audi and Porsche brands. A hearing is scheduled for Nov. 3 before the same judge on progress toward a fix and a settlement. Der Spiegel recently reported that VW Group might have to buy back about 25,000 older Audi Q7 V-6 diesels that cannot be fixed. VW has said it hopes to have a satisfactory fix for the 3.0-liter models.

Volkswagen still faces potentially billions more to pay in federal and state regulatory fines and penalties, and to settle possible Justice Department criminal charges. It also faces at least 17 individual state suits. The settlement approved today also includes expensive penalties if VW fails to get at least 85 percent of the cars fixed or off the road.

“While we are now able to begin providing benefits to affected 2.0-liter owners and lessees, those with depreciated and polluting 3.0-liter vehicles deserve a similarly fair and speedy resolution,” said Cabraser today. “We continue our efforts on their behalf.”

The company in its statement said, “Volkswagen remains focused on resolving other outstanding issues in the United States and continues to work towards an agreed resolution for customers with affected 3.0-liter TDI V-6 diesel engines.”

 
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