Words by Abhishek Wairagade
Volkswagen AG will be asked to pay over $15billion in settlement by US government regulators to compensate 5 lakh owners over the Dieselgate scandal that broke out in September 2015.
The settlement, which will be announced on Tuesday morning in Washington, includes $10.033billion of buyback money to be paid to 4.75 lakh owners and almost $5billion in funds of fines to be paid for excess diesel emissions. Another settlement is expected to be issued soon which will be valued at more than $500million, taking the total to over $15billion.
Owners of the scandal hit cars with 2-litre engines will receive at least $5100 compensation in addition to the estimated value of the vehicle. Some owners are expected to get up to $10,000 compensation, depending on the condition of the car. Prior owners are expected to get half of current owners and leased car owners would be compensated as well. Owners will receive compensation even if their vehicle has been repaired.
The $2billion offset fees could be increased if Volkswagen does not buy back 85 per cent of the total affected vehicles before mid-2019. The green energy and zero emission efforts will be spent over a period of 10 years, being valued at $2billion.
The settlement is cited to be the most expensive ever in the history of US auto industry. Volkswagen had admitted to having misled the regulators in September 2015 by installing secret software that allowed vehicles to emit up to 40 times legally allowable pollution. Sales have been affected globally and Toyota has been put on the top of the table again, when it comes to global sales, putting Volkswagen on the second spot. Over 1.2 crore vehicles have been affected by the scandal globally, leading to the departure of the company’s CEO, Martin Winterkorn. This specific settlement does not include another 90,000 vehicles powered by the 3-litre diesel engines, which had a different version of the cheating software. Apparently, Volkswagen vehicles in India are not affected by the Dieselgate but sales had taken a hit initially, when the scandal broke out.
Source: Reuters