VW Diesel Settlement: What Owners, Lessees Need to Know

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CARS.COM — The Volkswagen Group, regulators and attorneys for VW owners and lessees announced a massive settlement agreement today of civil claims regarding about 475,000 diesel cars in the U.S. from the 2009 to 2015 model years for which the company cheated on emissions tests. All of this is subject to final approval of the proposed deal. A hearing on court approval is scheduled for July 26. Here’s what owners need to know:

Related: VW Diesel Crisis: Timeline of Events

Which cars are affected?

Today’s settlement affects about 475,000 cars:

  • 2009-2015 Volkswagen Jetta TDI
  • 2009-2014 Volkswagen Jetta SportWagen TDI
  • 2012-2015 Volkswagen Beetle TDI
  • 2012-2015 Volkswagen Passat TDI
  • 2010-2015 Volkswagen Golf TDI
  • 2015 Volkswagen Golf SportWagen TDI
  • 2010-2013, 2015 Audi A3 TDI

What’s the problem with them?

All of these cars have a variation of Volkswagen’s 2.0-liter four-cylinder diesel engine that regulators found to have a so-called “defeat device” in its emissions-control system. The device ramps up emissions controls only when it senses the car is undergoing emissions testing and dials them back for better performance and fuel mileage when the vehicle is on the road. The EPA found that in regular driving, such systems allowed nitrogen oxide pollutants at up to 40 times their allowable levels under the Clean Air Act.

What’s VW going to do?

Today’s settlement mandates that Volkswagen gets at least 85 percent of these cars off the road, the EPA said. To do that, the automaker will offer a buyback program offering to pay owners the market value of their cars before the scandal broke — that is, Sept. 18, 2015 — plus a cash payment. It can also develop a way to fix the systems, but regulators have yet to approve one. Owners may choose to wait for a fix and take just the cash payment. The deadline for a fix is June 2018.

How much will I get?

It depends on the specific car and where you bought it. The proposed settlement uses the clean trade-in value from the NADA Used Car Guide’s September 2015 issue, adjusted for options and mileage regardless of its current condition.

Atop that, owners can get a cash compensation that’s equal to 20 percent of the car’s value plus about $3,000. That total bonus works out to $5,100 to about $10,000, court documents showed, and that’s what owners who keep their cars would get. If you participate in the repurchase program, the total value — including the compensation bonus — works out to anywhere from $12,475 to $44,176 depending on the car. See the full table of values here.

What do I have to do to get that?

First, mark July 26 on your calendar. That’s the date of a hearing for court approval of today’s settlement. In the meantime, you can go to VW’s settlement website and enter your vehicle identification number and mileage to verify that it qualifies and to see the estimated value of your settlement. If all goes on schedule, the program could start as early as November. “The goal here is to make this as painless as well as a profitable a process for consumers as possible,” said Elizabeth Cabraser, a court-appointed lead counsel for the Volkswagen consumer plaintiffs in class action.

How do I find my VIN?

It should be at the bottom corner of your windshield, visible under the driver-side glass. Watch our quick video here to see more.

What if I owe more on my car than it’s worth?

If your loan is through Volkswagen’s credit arm, today’s settlement requires the automaker to forgive the loan, including any upside-down portion. If your loan is through a third-party lender, such as a bank or credit union, Volkswagen will pay up to 130 percent of your car’s entitled value — for example, $26,000 instead of $20,000 — to pay off the loan.

What if I leased my car?

Lessees can terminate their leases for free and receive an additional payment that works out to about half of the cash payment owners would get, according to court documents. It adds up to $2,634 to $4,955.

Is there an emissions fix for these cars?

Not yet. If one is approved, VW will fix owners’ vehicles for free so they can keep them. But that’s a big “if.” The automaker has already proposed one and regulators rejected it in January on the grounds that it was too vague. Officials hope that “within a six-month window, we will have a determination as to whether a fix is possible,” EPA Administrator Gina McCarthy told reporters today. If no fix is available by May 1, 2018, you’ll be faced with taking the buyout offer, according to court documents.

What if that fix affects mileage or performance? Can I still choose to take the buyback?

Yes. If Volkswagen can get a fix approved, it has to inform owners of any impact on mileage and performance, officials said today at a press conference for the plaintiffs’ committee. If you don’t like what you hear, you can take the buyback option instead. And if you get the fix but don’t like what it does to your car in practice, you’ll be able to seek lemon law-style protections, the plaintiffs’ committee said today. Volkswagen will also furnish an extended emissions warranty, court documents said.

Is it still legal to drive my car?

It should be. Whether you wait for the buyback program or fix to take place, it’s “anticipated that Class Members will be allowed to drive their cars legally through the course of the Class Settlement Program,” court documents said.

What if I sold my TDI since September 2015?

You can still receive about half of the restitution payment — so, approximately $2,500 to $5,000. To qualify, you’ll have to wait until at least the July 26 hearing. Once the order is approved, you’ll have 45 days from that date to identify yourself. The new owner gets the rest, and the option to sell the car back to VW.

If you sell your car after June 28, you won’t be eligible for any payouts, court documents say.

When will the payments come?

Volkswagen will notify owners of their options this fall, but payments won’t come until after the settlements take effect. The plaintiffs’ committee said today that checks and buybacks could start in November if everything goes according to plan, and the process won’t be delayed if VW decides to pursue any appeals. In the meantime, head to Volkswagen’s settlement website to determine your specific compensation, receive updates and make appointments with your dealer.

When do I have to decide what to do?

You have until May 2018, EPA chief McCarthy said.

If I take the check, can I also sue Volkswagen separately?

No. You must choose either to take in the class-action settlement or opt out and pursue a lawsuit and compensation on your own.

What about the diesel V-6 vehicles?

The Volkswagen Group’s scandal also affects some 80,000 cars with the automaker’s diesel 3.0-liter V-6, but today’s settlement does not resolve claims regarding those vehicles. They include:

  • 2013-2016 Volkswagen Touareg TDI
  • 2013-2016 Porsche Cayenne Diesel
  • 2013-2015 Audi Q7 TDI
  • 2014-2016 Audi A6 TDI
  • 2014-2016 Audi A7 TDI
  • 2014-2016 Audi A8 TDI
  • 2014-2016 Audi Q5 TDI

Audi and Porsche are both Volkswagen Group brands. In a statement today, the automaker said it “continues to work expeditiously” to resolve situation with the V-6 diesels.

How much will this cost VW?

The total for this settlement of civil litigation regarding 2.0-liter diesel cars in the U.S. will run to an estimated $14.7 billion, regulators said today. It’s the largest automotive litigation settlement in U.S. history. That total includes up to $10.03 billion in owner compensation plus $4.7 billion for additional funds for pollution mitigation projects by states and tribes and payments to a green-vehicle technology fund. The total does not include another $600 million VW agreed to pay to resolve pending state lawsuits. It also does not resolve pending civil penalties (such as federal fines) or criminal liabilities (the Justice Department is pursuing a criminal investigation), which could add substantial amounts to the bill.

That’s a lot. Will this drive VW into bankruptcy?

It’s unlikely. The Volkswagen Group has reportedly set aside more than $18 billion to cover costs of the scandal, most of which now will be taken by the U.S. legal costs and recalls. Today’s settlement “is within the scope of our provisions and other financial liabilities that we have already disclosed, and we are in a position to manage the consequences,” said Frank Witter, the automaker’s chief financial officer, in a statement today.

But the full costs are a long way from being known. VW says at least 11 million cars worldwide have the diesel EA189 engines at the heart of the scandal and the U.S. deal does not settle claims in other countries. It also does not resolve investor suits filed against VW, among other claims.

What sort of environmental mitigation will Volkswagen do?

A $2.7 billion fund will be created to which states and tribes will be able to apply for funding “to implement clean air projects that will make sense for them,” McCarthy said at a press conference today. She said Volkswagen also “will invest $2 billion in infrastructure for zero-emission vehicles in the United States. This includes charging stations and improving access to zero-emission vehicles.”

What happens to the cars VW buys back?

If there’s no approved emissions fix, VW must scrap the cars. They cannot be operated in the U.S. and the deal stipulated that they cannot be shipped elsewhere. Regulators say they will encourage VW to recycle any scrap that can be reused, officials said at a Department of Justice press conference today.

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