CARS.COM — The Volkswagen Group has reached an agreement with U.S. and California regulators and consumer class-action attorneys to pay as much as $14.7 billion to settle claims a diesel emissions scandal that affects hundreds of thousands of diesel cars from as far back as the 2009 model year. VW will pay up to about $10 billion to buy back or terminate leases for about 475,000 model-year 2009 to 2015 cars in the U.S. and also pay nearly $5 billion into two funds to mitigate pollution and invest in environmental technology.
Related: VW Diesel Crisis: Timeline of Events
Today’s settlement gives owners the choice of returning the car, or having the emissions problems fixed by VW, if regulators eventually approve a remedy. None exists now.
The owners of affected VWs will be able to cancel their leases at no cost or sell their vehicles back to Volkswagen. Owners who elect to sell their cars back to VW will receive the trade-in value just before Volkswagen’s September 2015 disclosure of the emissions crisis, the EPA said, plus an additional cash payment. Their total compensation will range from $12,500 to $44,000 depending on the specific car, its mileage, age and where it was purchased. VW must also offer to forgive any loans for owners who owe more on their cars than the pre-September values. If they have third-party loans — through banks or credit unions — VW will pay up to 130 percent of the buyback values.
Alternatively, owners VW may wait for to see if regulators approve a fix to modify their cars reduce emissions. In that case, they can keep their cars and still will receive a payment of at least $5,100 to about $10,000. The automaker proposed such a fix in the past, but authorities rejected it in January on the grounds that it was too vague.
Lessees and owners who sold the vehicle since last September also will receive payments, though smaller amounts.
In any case, Volkswagen must get at least 85 percent of these four-cylinder diesel cars off the road or face additional fines.
The settlements “partially resolve” allegations by the EPA and California regulators that Volkswagen used “defeat devices” in its diesel vehicles to thwart emissions tests, the EPA said. They also resolve claims by the FTC that VW aired deceptive ads for its clean-diesel cars. However, today’s settlement does not resolve pending civil fines and a Justice Department criminal investigation against Volkswagen, the EPA noted. The settlement also does not resolve claims regarding 80,000 V-6 diesel vehicles that are also alleged to have emissions problems.
A hearing for final approval of the settlement proposal is scheduled for July 26; if approved, the buyback program could start as early as November.
Separately, VW did agree to pay about $600 million to sette state civil suits against the company.
We’ll report more as we find out specifics, so stay tuned.
Editor’s note: This story was updated on June 28 to reflect total payments for the owners and to clarify that Volkswagen will pay $5 billion to offset pollution and invest in green-car technology.