Volkswagen Agrees $15.7bn Settlement with US Regulators over Diesel Scandal
VW will spend up to $10 billion on buybacks and fixes for 475,000 diesel cars and fund environmental projects as part of a record US settlement.
Volkswagen and US authorities finalised a $15.7 billion settlement in June 2016 to address the fallout from the company’s diesel emissions cheating scandal. The agreement covers nearly half a million 2.0-litre TDI vehicles sold in the United States between 2009 and 2015, and includes compensation, buybacks, and funding for environmental initiatives.
Buyback and Compensation for Diesel Owners
Volkswagen committed up to $10.03 billion for buybacks, lease terminations and fixes for owners of affected 2.0-litre TDI models. The programme covers 2009–2015 Jetta, Passat, Golf and Beetle TDIs, as well as the Audi A3 diesel. Owners can choose a buyback at the car’s retail value as of September 2015, just before the scandal broke, or opt for a repair if a technical solution is approved by regulators.
Customers are expected to receive between $12,500 and $44,000, depending on model, year and mileage. Volkswagen will also pay off loans up to 130 percent of the car’s value if the outstanding finance exceeds the buyback amount. The company is required to complete buybacks or repairs on at least 85 percent of the 475,000 affected cars, or face further penalties.
Environmental Projects and State-Level Agreements
Beyond owner compensation, Volkswagen will pay $2.7 billion to fund projects aimed at reducing nitrogen oxide emissions across the US. A further $2 billion will be invested over ten years to support zero-emission vehicle infrastructure, access and education. These measures are intended to offset the environmental impact of the excess emissions from the affected diesels.
Separately, Volkswagen reached a $603 million agreement with attorneys general from 44 states, the District of Columbia and Puerto Rico to resolve state-level consumer protection claims related to the diesel scandal. This is in addition to the federal settlements and does not resolve civil penalties or claims involving the larger 3.0-litre diesel models.
Ongoing Technical and Legal Challenges
A technical fix for the affected 2.0-litre engines must still be approved by US regulators before repairs can proceed. The settlement requires Volkswagen to develop and implement a compliant solution, but at the time of the agreement, no approved fix was in place. The company faces further legal action over the 3.0-litre diesel vehicles, which are not included in this settlement.
The scale of the settlement reflects the severity of the emissions violations and the regulatory response in the US. Volkswagen’s agreement with US authorities marks the largest automotive buyback and environmental remediation programme in American history.
