Volkswagen Agreed to Compensate U.S. Customers $5,000 in Dieselgate

The German carmaker has reached an agreement with Judge Charles Breyer to pay settlement to its U.S. customers which were affected in its rigged software. Volkswagen must also fix its 600,000 diesel cars sold in the United States.

The scandal begin in September 2015 when the U.S. Environmental Protection Agency (EPA) found out that the German carmaker rigged its software engine to cheat emission testing. VW intentionally reprogrammed its turbocharged direct injection (TDI) diesel engines to activate certain emissions controls during laboratory emissions testing. As a result, the emission testing showed the vehicle's emission of nitrogen oxide (NOx) meet the U.S. standard, while in reality, it emitted 40 times more NOx.

VW had already installed its rigged software in eleven million cars worldwide and 600,00 cars in the United States. Following the finding, EPA issued a notice of violation of the Clean Air Act to the carmaker. Afterward, thousands of customers filed a lawsuit accusing VW of breach of contract, fraudulent concealment, false advertising, and other violations.

In the court, judge ordered Volkswagen to fix the software before the deadline imposed. Last month, U.S. District Judge Charles Breyer gave time extension to Volkswagen to come out with a feasible plan to fix the damage. According to Deutsche Welle, one day before the deadline, VW has agreed to the settlement and narrowly escape the trial.

In the agreement, VW would pay each customer affected by its cheating software a $5,000 compensation. The company must also pay cost to repair the vehicles. EPA which found the rigged software, was also tasked to evaluate VW's commitments to make up the damage done by its emissions.

Earlier on Wednesday, Reuters reported that two sources familiar with the matter had told the news agency that VW prepared to pay more substitution. The company would substantially increase the amount of money set aside to cover its emissions test cheating scandal from the $7.6 billion (€6.7 billion) currently earmarked.

Volkswagen was reported to fully cooperate with the legal proces. USA Today reported that former FBI director Robert Mueller, who was appointed to negotiate settlements with Volkswagen, told Judge Breyer last month that the settlement talks were progressing nicely.

VW has also reached the framework of a deal to fix cars following EPA's rejection of previous repair plan last January. A professor of product liability law at the University of Richmond, Carl Tobias, also gave a positive comment, saying, "It sounds like the kinds of things that the judge wanted to see, so maybe there's some progress."

Following the settlement, analyst recommended to buy VW shares. Arndt Ellinghorst of Evercore ISI market research firm predicted the settlement is a good sign to buy the company's shares, "It would be a major positive trigger for the stock if VW quantified the total potential cost of the diesel affair."

VW has reached an agreement with the judge to pay settlement to the U.S. customers related to its diesel emission scandal. VW also agreed to fix its 600,000 diesel cars sold in the United States.

Tags

Volkswagen, Environmental Protection Agency, emissions

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