VW diesel settlement details: buybacks, payments, modifications, fines, more

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2012 Volkswagen Passat TDI Six-Month Road Test

2012 Volkswagen Passat TDI Six-Month Road Test

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More than nine months after the Volkswagen diesel cheating scandal came to light, the full details of the proposed final settlement between VW and the EPA were released this morning by Judge Charles Breyer.

Owners of the TDI diesel vehicles from Audi and Volkswagen fitted with "defeat device" software between 2009 and 2015 must now decide what to do.

But they also have to wait four more weeks, while comments on the proposed deal are received by both parties—and a lot of commenting is anticipated.

The current date for the finalized terms to be released is July 26, after which VW will contact owners about buybacks, separate cash payments, and more.

DON'T MISS: VW diesel buyback: what other automakers paid for used vehicles

The proposed settlement, weighing in at 225 pages, was agreed among Volkswagen AG, the U.S. Department of Justice, the State of California, the U.S. Federal Trade Commission, and the owners of the cars represented by the Plaintiffs Steering Committee in consolidated class-action lawsuits.

Today's announcement includes a fund of $10.03 billion from Volkswagen to buy back or modify the affected vehicles. The goal is remove the majority of them from the road within three years.

Of 499,000 such vehicles built, approximately 466,000 remain on the road today, according to VW. The $10.03 billion number assumes 100 percent of the cars are bought back

If VW is not successful in removing 85 percent of the affected 2.0-liter cars from U.S. roads by June 30, 2019, it will have to pay additional funds into an environmental mitigation trust.

Consumer Reports tests 2015 Volkswagen Jetta TDI diesel in 'cheat mode,' October 2015 [video frame]

Consumer Reports tests 2015 Volkswagen Jetta TDI diesel in 'cheat mode,' October 2015 [video frame]

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The vehicles using the 2.0-liter TDI turbodiesel engines affected by the settlement are:

  • 2015 VW Golf TDI, Golf SportWagen TDI
  • 2015 Audi A3 TDI
  • 2015 VW Jetta TDI, Passat TDI, Beetle TDI
  • 2012-2014 VW Passat TDI
  • 2009-2014 VW Jetta TDI, Jetta SportWagen TDI
  • 2010-2013 VW Golf TDI
  • 2012-2014 VW Beetle TDI
  • 2009-2013 Audi A3 TDI

In today's settlement, these are the relevant points that owners need to know—and, perhaps, comment to the court on.

2015 Volkswagen Golf TDI SE

2015 Volkswagen Golf TDI SE

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BUYBACKS and LEASE TERMINATIONS FOR OWNERS

Owners who choose to let VW buy back their cars will be paid the "Clean Trade-In" value established by the National Automobile Dealers Association (NADA) as of September 2015, before the scandal broke.

That amount will be adjusted to reflect options fitted to the vehicle and mileage accrued.

Some owners will be able to have their car-loan obligations forgiven or their leases terminated without penalty.

Buybacks could start as early as this fall, or about a year after the scandal became public.

READ THIS: VW diesel owners have lost $1,500 in value on their cars: price analysis

APPROVED EMISSIONS MODIFICATIONS TO CARS NOT SOLD BACK

If owners and lessees of the affected vehicles prefer, they can wait to see whether modifications are approved to bring their cars into compliance with emissions regulations.

The chances of that happening vary with the vehicle, and are probably close to zero for the 325,000 vehicles without a Selective Catalytic Reduction (urea injection) after-treatment system fitted.

Those vehicles include all 2009-2014 Volkswagen models except the 2012-2014 Passat TDI, and the 2009-2013 Audi TDI.

2012 Volkswagen Passat TDI Six-Month Road Test

2012 Volkswagen Passat TDI Six-Month Road Test

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The Passat TDIs and all 2015 models from VW and Audi may be fixable with modifications to their SCR systems, but the effects on performance and fuel economy are not known at this time—and won't be until any such fixes are approved by the EPA and CARB.

The modifications, which would be free, would include extended warranty terms and "lemon law" protections in states that have them.

If modifications are not approved for specific vehicles, owners can still choose to take the buyback.

It is likely that such an approval process will take considerable time, as the agencies are likely to be very, very scrupulous in inspecting the operation of the modified engines under all possible real-world circumstances.

CHECK OUT: VW diesel agreement: what we know (and don't know) in 5 questions (Apr 2016)

CASH PAYMENTS TO OWNERS (separate from Buyback/Modification choice)

The payment to owners who agree to participate in the settlement of the class-action suit is on top of, and entirely separate from, the buyback-or-modify decision.

Owners of the affected 2.0-liter diesel cars as of September 18, 2015, will be offered between $5,100 and $10,000.

The amount is established by a detailed set of calculations specified by the settlement agreement, and it cannot be reduced by lawyers' fees or other costs, which will be paid by Volkswagen.


 
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