A federal judge in San Francisco overseeing the multi-district litigation said Thursday the company had reached a tentative agreement that will lead to the buybacks and further "substantial compensation" for car owners. Specifics of that compensation remained unclear Thursday, though German newspaper Die Welt had earlier reported car owners could receive as much as $5,000 per vehicle for their troubles.
Details of the plan are due before the court by June 21, but under the terms of the agreement, Volkswagen will offer owners of roughly 480,000 cars equipped with 2.0-liter diesel engines the option of either having their car modified or bought back by the company.
But before all TDI owners celebrate too quickly, note the parameters of Thursday's agreement only apply to owners of affected vehicles with 2.0-liter engines. An additional 80,000 affected cars in the US contain 3.0-liter engines that fall outside the scope of Thursday's agreement. It's unclear when those owners will see relief, though those discussions are ongoing.
"The deal will allow the German manufacturer to bring some certainty back to its operations, while also providing relief to disgruntled drivers," said Tom Young, one of the lawyers representing the plaintiffs in the case.
"A federal judge's blessing of Volkswagen's framework of a plan to take care of its customers is a long-awaited first step, but much more work needs to be done to flesh out the details in the coming months," said Michelle Krebs, a senior analyst at Autotrader. "Indeed, it is a fairly sketchy framework at this point. Meantime, Volkswagen customers will have to stay patient a bit longer until all of the details of the compensation deal are hammered out."
Thursday's agreement will cost Volkswagen billions, and it further requires the company to establish a fund for environmental "remediation." Details of that effort were unclear Thursday, though those funds will ostensibly go to help offset the damage caused by nearly 600,000 cars designed to spew pollution by as much as 40 times the federal emissions thresholds established by the Clean Air Act.
In a written statement, Volkswagen said it "is committed to earning back the trust of its customers, dealers, regulators and the American public. These agreements in principle are an important step on the road to making things right."