Volkswagen and US regulators announced a massive, $14.7 billion settlement in the ongoing diesel scandal yesterday. As with any legal case this large, there are a number of questions that might not be immediately clear. To fix that problem, here are answers to some of the questions you might have about the deal. If you've got a question about the settlement that isn't answered here, contacts us (in the comments, via email or on social media), and we'll try to figure out an answer and add it to this post.

Who can file a claim?

Anyone who owns or leases an affected VW or Audi diesel with a 2.0-liter diesel engine in the US. Also, anyone who sold an affected car after September 18, 2015 (the day the scandal became public) is entitled to half the compensation a current owner has. No owner has to file a claim and each one is allowed to sue VW independently if they prefer.

Which vehicles are affected by the settlement?

In total, around 475,000 vehicles in the US are affected. These include the following makes and models (again, only with a 2.0-liter diesel engine).
2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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2013 Volkswagen Beetle TDI Convertible
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How can an owner file a claim?

Owners must go to VWcourtsettlement.com to begin the claim process. On that site, owners will need to choose to have VW buy back the vehicle or to have VW fix (modify) the car for free. This page will start accepting claims July 26, 2016 and owners have until September 1, 2018 to start the process. You can also go to that page and check your VIN to see if your vehicle is covered.

Can I buy an affected diesel now and get VW to buy it back?

Short answer: Yes, but it may not be worth it. For the longer answer, look at page 65 of the DOJ's Partial Consent Decree (Doc. No. 1605), available here and the settlement summary available here. Remember that you can't buy a new affected diesel in the US because there has been a stop-sale in place since the scandal became public. Used diesels, though, are still on the market, and from the settlement text, it sure seems like if you go buy one now, you'll become an eligible owner for the purposes of the deal:

"Eligible Owner" means the registered owner or owners of an Eligible Vehicle on the day the Eligible Vehicle is sold to Settling Defendants for the Buyback or receives an Approved Emissions Modification, except that the owner of an Eligible Vehicle who had an active lease issued by VW Credit, Inc. as of September 18, 2015, and purchased the previously leased Eligible Vehicle after June 28, 2016, shall not be an Eligible Owner. For avoidance of doubt, an Eligible Owner ceases to be an Eligible Owner if he or she transfers ownership of the Eligible Vehicle to a third party on or after June 28, 2016; and a third party who acquires ownership of an Eligible Vehicle on or after June 28, 2016, thereby becomes an Eligible Owner if that third party otherwise meets the definition of an Eligible Owner. Subject to the definition of Eligible Owner in the FTC Order, an owner of an Eligible Vehicle will not qualify as an Eligible Owner while the Eligible Vehicle is under lease to any third party, although any such owner, including any leasing company other than VW Credit, Inc., who otherwise meets the definition of an Eligible Owner would become an Eligible Owner if such lease has been canceled or terminated and the owner has taken possession of the vehicle.

That all sounds good, but the settlement summary makes it clear that if you are buying an affected TDI now that the terms have been made public, you're not going to be able to get the full buy back amount:

These tables [see here] assume that you owned your car when the emissions accusations became public on September 18, 2015, and that you still own it. If you no longer have your car or if you purchased it after September 18, 2015, then you will be offered a lesser amount, assuming you qualify for the settlement.


How much will affected diesel owners get back?

Under the settlement agreed to yesterday, VW is going to pay a lot of money to affected TDI owners. How much you get depends entirely on which vehicle you have and which remedy you choose. If you want VW to buy back your car, the general rule is that you'll get the pre-scandal trade-in value (based on National Auto Dealer Association numbers) plus between $5,100 and $10,000, depending on the model and year. Automotive News says that the total buyback value will range "from a low of about $12,500 to a high of about $44,000."

If you want to wait and see what the fix is (see below), then you can still get a payout of between $5,100 and $10,000.

vw tdi engine

What about the fix?

Turns out, the fix is not in. VW has proposed solutions to the California Air Resources Board (CARB), but CARB has not yet approved one. In fact, at least one CARB official made it public that he doesn't think VW can even do this particular fix. After all, if VW was able to make the cars work the way it wanted to without needing an emissions cheat device, the it would have done that from the get go. Still, VW is indirectly promising that a fix is on the way by offering it as an option in the settlement. The settlement claim website says, "Volkswagen is working on an emissions modification for each of the cars listed above. EPA and CARB will need to approve any emissions modification before this option becomes available." How a future fix will affect the performance of an affected TDI is not yet clear, since we don't know what the modification will be.

What will happen to the vehicles VW buys back?

VW isn't saying, but the most likely destination is the scrap yards. Of course, the settlement specifically says that, "in no event may the ECU, diesel oxidation catalyst, or diesel particulate filter be salvaged, resold, or exported." That doesn't mean that the body panels, windows, etc. don't have some value, but since VW can't resell these vehicles without an approved fix, it might just be easier to sell 'em for scrap and move on.

Is $14.7 billion the maximum VW will have to pay?

Absolutely not. The $14.7 billion represents $10 billion for consumers, $2.7 billion for a fund to reduce nitrogen oxide emissions (the cheat device installed in the vehicles meant they emitted more NOx than was allowed) and another $2 billion to support zero-emission vehicles. As stated above, VW Group's 3.0-liter TDI vehicles could be covered by a separate settlement. Also, while VW can't control exactly what its TDI owners do in terms of filing a settlement claim, it "must achieve an overall recall rate of at least 85% of affected 2.0 liter vehicles under these programs or pay additional sums into the mitigation trust fund." For every percentage point of the 85 percent level (so, for every 4,750 vehicles) that VW fails to account for by the end of June 2019, it will have to pay another $85 million to the fund.

Does this settlement affect VW owners outside the US?

No. Despite an EU commissioner saying that VW Group should treat all of the customers it lied to the same, the deal announced yesterday applies only in the US. For now, and in part thanks to differences in class-action laws in Europe compared to the US, European drivers might have to make due with a piece of pipe.

READER QUESTION ADDENDUM:

From Mike Palmero: "I had intended to buy my Passat TDI at the end of my lease. How is that going to work out. Could I still purchase the vehicle and get the compensation."

Apparently, yes, but you would not be compensated as an owner. A VW spokesperson told AutoblogGreen that, based on the wording in the settlement, "It appears, based on what is included in the definitions, that the owner below would be compensated as a lessee."

Here's the pertinent section of the agreement:

2.29. "Eligible Lessee" means (1) the current lessee or lessees of an Eligible Vehicle with a lease issued by VW Credit, Inc.; (2) the former lessee or lessees of an Eligible Vehicle who had an active lease issued by VW Credit, Inc. as of September 18, 2015 and who surrendered or surrenders the leased Eligible Vehicle to Volkswagen; or (3) the owner of an Eligible Vehicle who had an active lease issued by VW Credit, Inc. as of September 18, 2015, and who acquired ownership of the previously leased Eligible Vehicle at the conclusion of the lease after June 28, 2016. For avoidance of doubt, no person shall be considered an Eligible Lessee by virtue of holding a lease issued by a lessor other than VW Credit, Inc.

Lessee Restitution:
All Eligible Lessees will be offered a cash payment of 10% of the vehicle's base value (adjusted for options but not mileage) plus $1,529.005.

• Example: An Eligible Lessee with an Eligible Vehicle that has a base value adjusted for factory options of $20,000 will receive $3,529.005 as Lessee Restitution. This amount was calculated by multiplying $20,000 by 10%, and adding $1,529.005.

The amount of Lessee Restitution is the same whether or not the lessee has an active lease and whether the lessee chooses a Buyback or an Approved Emissions Modification.


From Jeff Miller: Is there a way for TDI owners to opt for the fix, wait to see if the fix is terrible, and then take the buyback offer?

No. A VW spokesperson told AutoblogGreen the following: "If a fix is approved, Volkswagen is required to provide the details of the fix, along with any impacts to the vehicle's performance, etc. to eligible consumers. If upon learning of the details of the fix, the customer does not wish to proceed with it as outlined, they have the ability to pursue the buyback option. If they review the details and decide to pursue the option to fix and get the car repaired, they will not be able to later pursue the buyback option."

From Boatnski2009: Are the buybacks and reimbursement tax free or will they be taxed?

VW isn't going to give out tax advice, but the settlement agreement says that: "Nothing in the Class Action Agreement prevents tax advantaged sales tax treatment of the Buyback, which may be available under the laws of some states. Class Members are encouraged to consult their personal tax advisor for further assistance regarding any tax ramifications of this Class Action Settlement." In other words, check with your state laws and consult your own tax advisor.

For more information on what "tax advantaged" means, see Wikipedia: "Tax advantage refers to the economic bonus which applies to certain accounts or investments that are, by statute, tax-reduced, tax-deferred, or tax-free. Governments establish the tax advantages to encourage private individuals to contribute money when it is considered to be in the public interest."

Related Video:

Attorney: VW Settlements Send 'Strong Message'

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