Volkswagen, Regulators Announce Diesel-Car Buyback Plan

CARS.COM — Volkswagen and government regulators today announced the framework of a deal to resolve the diesel emissions cheating scandal. The deal includes a company offer to buy back up to 480,000 of its 2.0-liter diesel cars. Owners and lessees also would get additional cash compensation.

Related: VW Diesel Crisis: Timeline of Events

The deal was presented at a court hearing in San Francisco before U.S. District Judge Charles Breyer, the federal judge overseeing consolidated lawsuits against Volkswagen regarding the diesel cheating. He had ordered the parties to present by today a proposed remedy for the defective emissions systems that involve nearly 600,000 of VW’s model-year 2009 to 2016 2.0-liter and 3.0-liter diesel-powered vehicles in the U.S.

What does this mean for owners? If the deal becomes final, owners will have some options, including:

• Have VW buy back the vehicle (no details were given on how the value would be set)
• Have the car modified to meet emissions standards when a fix is approved
• Cancel the lease on leased vehicles and simply return the car
• Receive additional payment of “substantial compensation,” according to Breyer, regardless of which option the consumer takes

Breyer said that consumers will not have to choose until they get specific details on the options and that “there is nothing for the consumers or their lawyers to do” until those details are made public.

That may not take long. Breyer set May 19 for a status conference on progress to a final deal and set June 21 as a deadline to file a proposed final settlement for public disclosure and comment. He set July 26 for a hearing for preliminary approval of the final deal. The judge admonished the parties to keep negotiations confidential.

“There is a definite momentum to resolving the issues; there is still a lot of work to be done,” the judge said at the hearing.

The buyback deal would cover the company’s 2.0-liter four-cylinder diesel models. These cars were equipped with “defeat software” that cuts emissions during testing but allows the cars to emit up to 40 times the legal amount during normal driving. Still to be disclosed is how the cars would be valued for a buyback. A Cars.com survey in January found the prices for most VW diesel models had declined in double digits since the scandal became public in September. VW so far has given owners $500 plus a $500 credit to spend at a VW dealer.

Specifically not addressed by the proposal are the company’s 3.0-liter V-6 diesels in VW, Audi and Porsche vehicles that also allegedly have the defeat software. There was also no announcement regarding fines and penalties to resolve pending EPA enforcement, a Justice Department criminal probe and a Federal Trade Commission lawsuit alleging misleading advertising, among other legal issues.

Breyer directed the parties to work “expeditiously” to resolve these issues.

The agreement to get at least some of the cars off the road comes after VW has failed so far to present regulators with a technical remedy that would bring all the cars into full emissions compliance. The EPA and the California Air Resources Board in January rejected an initial repair proposal by Volkswagen. Some of the cars might be able to get hardware and software fixes that will bring them into compliance, if regulators sign off on the fix. The repairs could, however, affect fuel mileage and performance.

The proposed deal also includes provisions for VW to fund “appropriate remediation” of the environmental damage caused by the cheating and a commitment of funds to unnamed green initiatives. Volkswagen is expected to update as soon as Friday company financial results that will include preliminary estimates for the costs it will incur for the diesel scandal. 

“Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the American public. … Volkswagen intends to compensate its customers fully and to remediate any impact on the environment from excess diesel emissions,” the automaker said in a statement.