U.S. officials announced this morning that Volkswagen would set aside $10 billion for customer buybacks, early lease terminations and restitution payments. The automaker rigged its 2.0-liter diesels with software that masked harmful nitrogen oxide emissions, which affected some 500,000 vehicles here. A total of 11 million vehicles worldwide had the “defeat device” installed. The company dumped up to 40 times the allowable levels of some pollutants when on the road.
The settlement will allow the owner of an affected diesel the repurchase price of their vehicle as of September 18, 2015 (when the EPA first exposed the scandal) plus $5,100 to $10,000 depending on the model and year. Lessees who terminate early will receive half of what an eligible owner would receive. Owners will have until May 2018 to decide.
Volkswagen will either repair the vehicles to bring them up to current standards - if it can figure out how to fix them - or buy back the cars or terminate the leases.
Volkswagen will also deposit $2.7 billion in a trust to fund environmental programs nationwide to reduce nitrogen oxide emissions they will also put another $2 billion on clean-emissions infrastructure over the next decade.
Volkswagen issued the following statement, “We take our commitment to make things right very seriously and believe these agreements are a significant step forward,” said Matthias Müller, CEO of Volkswagen. “We know that we still have a great deal of work to do to earn back the trust of the American people. We are focused on resolving the outstanding issues and building a better company that can shape the future of integrated, sustainable mobility for our customers.”
The settlement is the largest of any automaker by a wide margin. General Motors paid a criminal fine of $900 million for a faulty ignition switch tied to at least 123 deaths and an additional $600 million to victims and their families.
Toyota agreed to pay a $1.2 billion fine in 2012 and settled with vehicle owners for an additional $1.1 billion for the unintended acceleration of its cars tied to at least 93 deaths.
The largest payout of any corporate wrongdoing is the $20.8 billion that BP agreed to pay last year to settle charges related to the 2010 Deepwater Horizon disaster in the Gulf of Mexico. Out of that $5.5 billion went for federal Clean Water Act penalties and $8.1 billion for natural resource damage and $4.9 billion to compensate for Gulf states affected by the oil spill.