Dieselgate: US compensation agreed

Volkswagen will start buying back turbo-diesel passenger cars in North America within weeks after final approval of a $US14 billion compensation scheme was signed off in the United States District court on Tuesday.

The German giant will spend a little over $US10 billion buying back or repairing as many as 475,000 four-cylinder turbo-diesel vehicles found to be fitted with emissions cheating devices that allowed them to pass official tests while spewing out far more pollutants than allowed during real-world driving.

VW will also spend another $US4.7 billion on programs to offset excess emissions and boost clean-vehicle projects.

Exposed in September 2015, the scandal rapidly grew to involve more than 11 million VW Group vehicles worldwide and has been dubbed ‘dieselgate’.

This week’s agreement finalises proceedings by Volkswagen owners, the US Environmental Protection Agency, the California Air Resources Board and the US Federal Trade Commission.

But it does not end the issue for VW as it must still sort out compensation for 3.0-litre turbo-diesels V6 owners whose vehicles produced up to nine times the legally allowable emissions in the USA.

It also faces lawsuits from at least 16 US states for additional claims. It has already paid out $US1.21billion to 652 US VW dealers and $US600 million to 44 US states to address some state claims.

Not all US VW owners affected by the controversy have signed up this week’s deal, opting instead to join separate class actions seeking more cash.

But in approving the settlement Judge Charles Breyer described it as “fair, reasonable and adequate,” and dismissed objections by nearly two dozen owners who criticised the pact in an October 18 hearing. Most complained that the compensation Volkswagen is paying is inadequate or the company wasn’t being punished enough.

Under the terms of the buyback Volkswagen will offer owners of affected vehicles pre-scandal trade-in value plus $US5100 to $US10,000 in additional compensation.

VW faces the prospect of paying multiple amounts of compensation for some vehicles because they have had more than one owner. The settlement covers 2.0-litre diesel Beetle, Golf, Jetta, Passat and Audi A3 cars from the 2009 through 2015 model years.

Buybacks begin in November, while owners who opt to keep their vehicle and have repairs may wait between a few more weeks and a year for that to happen.

While the US has been the centre of attention for dieselgate, VW is facing actions in other countries from both vehicles owners and authorities.

In Australia Volkswagen is fighting a class action in the Federal Court and facing an investigation by the Australian Competition and Consumer Commission but has insisted its diesel customers are not entitled to compensation.

“There continues to be public confusion around the essential facts of the case,” VW Australia spokesman Paul Pottinger told News Corporation. “The benefit for consumers of the court actions is unclear to us, given that free software solutions for most cars affected by the voluntary recall have been approved by the relevant government authorities.

“US regulations are unique in the world in that they demand drastically lower levels of Nox (nitrogen oxide) emissions than in other parts of the world, including Australia. European and Australian standards are built around lowering environmentally damaging carbon emissions and fuel consumption.”