VW and Bosch Reach $1.6 Settlement That Could Help End Cheating Scandal

Volkswagen Group and Robert Bosch will be paying at least $1.6 billion in separate diesel emissions cheating settlements, which could resolve claims from VW owners and end most of the scandal.

VW still faces suits from a few U.S. states and its investors. This settlement still awaits approval from the District Court judge in San Francisco, with a Feb. 14 hearing coming up. But it may resolve U.S. claims in class-action lawsuits from owners of the VW, Audi, and Porsche diesel vehicles that were rigged to falsely pass emissions tests.

All owners of these polluting diesels “will have a resolution available to them. We will continue to work to earn back the trust of all our stakeholders,” said Volkswagen Group of America CEO Hinrich Woebcke.

VW’s settlement will affect owners of 78,000 VW Touareg, Porsche Cayenne, and Audi Q7, A6, A7 and A8 vehicles with V-6, 3.0-liter diesels for model years 2009 through 2016.

In a separate settlement, Bosch agreed to pay $327.5 million to compensate owners of VW vehicles sold in the U.S. with rigged 3.0-liter and 2.0-liter diesel engines.

VW has agreed to pay owners of 3.0-liter vehicles who opt for fixes between $7,000 and $16,000 from VW if emissions fixes are approved in a timely fashion; the automaker will pay another $500 if the fix affects a vehicle’s performance.

The German carmaker has agreed to repurchase the 2009-2012 VW and Audi 3.0-liter vehicles. The company believes it will be able to fix the 2013 to 2016 VW, Audi, and Porsche 3.0-liter vehicles.

Owners who opt for a buyback will get $7,500 on top of the value of the vehicle.

In a separate article, Automotive News compared the likely volume of all the VW buybacks to the “Cash for Clunkers” federal program that started in 2009. Cash for clunkers cost the feds about $3 billion, and the VW settlements could go as high as $10 billion if that many owners choose the option. VW owners are likely to be happy with this option, as many U.S. consumers were with the federal program a few years ago, according to the report.

However, the cost could go higher on today’s settlement. Court documents show that if federal regulators don’t approve fixes for all the vehicles, VW’s cost could jump much higher – up to $4.04 billion and even more through individual owner compensation. Automotive News cited the U.S. Federal Trade Commission on this possible scenario; FCC had sued VW separately and voted unanimously to support this new settlement.

Under the Bosch agreement, the supplier will pay $163.3 million for 2.0-liter vehicle claims, with most owners getting $350 each. Owners of 3.0-liter vehicles will split $113.3 million, with most of these owners receiving $1,500 from Bosch.

Bosch has been blamed for helping VW design the “defeat device” software that allowed the automaker to cheat on emissions testing. Diesel car owners sued Bosch in 2015 for being a “knowing and active participant” in VW’s decade-long deceptive practice.

The German electronics and engineering supplier has also been pulled into a separate investigation and lawsuits over Fiat Chrysler Automobiles vehicles accused of possible diesel emissions rule violations. One lawsuit involves Ram 1500s and Jeep Grand Cherokees that have Bosch software.

The company announced last month that it will disclose provisions in May for costs related to its involvement in the diesel emissions cheating scandal.

SEE ALSO:  Volkswagen Reaches Preliminary Settlement in Federal Court Over Diesel-Emissions Scandal

VW still faces criminal charges by the U.S. Justice Department. On February 24, the automaker is expected to plead guilty in a Detroit courtroom to three felony counts as part of the plea agreement with the U.S. Justice Department.

The company has agreed to pay $4.3 billion in U.S. civil and criminal fines. The Justice Department also has charged seven current and former VW executives with violating laws.

The total cost continues to rise for VW, with the tab going up to about $25 billion in the U.S. to owners, regulators, state governments, and dealers. The company has offered to buy back about 500,000 of the “dirty diesel” vehicles.

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