Volkswagen (ETR:VOW3) of Germany has struck another deal with authorities in the United States over the emissions cheating scandal that has rocked the entire automobile industry. According to the agreement, Volkswagen will have to recall more than 80,000 Audi, Porsche, and Volkswagen cars that have 3-litre diesel engines. Observers are viewing this as one more opportunity for the car maker to put the scandal behind them.
Last June, authorities had allowed the company to recall 475,000 vehicles and reach a settlement of $15 billion for 2-liter diesel cars. That time, Volkswagen had offered to buy these cars back regardless of their present condition.
Compensations Volkswagen Will Have To Pay This Time
The car maker has also agreed to spend $225 million for funding projects that will focus specifically on bringing down nitrogen oxide emissions. Plus, $25 million will be paid to the California Air Resources Board for supporting using zero-emission vehicles in the state. Overall, this latest settlement is expected to cost them about $1 billion, including the $225 million.
Charles Breyer, the District Judge, ruled that owners of 3-litre cars manufactured between 2009 and 2016 should be given “substantial compensation”. Earlier, there were reports of several delays in passing the judgment. In reply, the court said all the sides were being given adequate time for negotiations.
Regulators Are Unhappy With the Ruling
CEO and President of Volkswagen (ETR:VOW3) America, Hinrich Woebcken, said this is another “important step forward in our efforts to make things right for our customers,” calling it a “fair and reasonable resolution”. But the regulators may not be completely happy with the court ruling. They are saying that the settlement is not addressing potential criminal liability. The ruling also does nothing to resolve pending claims from individual owners and the Federal Trade Commission.
The German automaker was blamed for cheating air pollution tests in the US, which the company had to admit in September 2015. It was revealed that Volkswagen was using software to make their vehicles appear cleaner than what they actually were. Without the software, the vehicles were found to be emitting 40 times more than the legally allowed limit. This severely damaged the reputation of Volkswagen and hurt their sales.
Meanwhile, the government of California has also declared that they will be increasing the number of electric vehicles sold in the state.
The German engineering firm, Robert Bosch, which made the software, has agreed to settle the civil allegations for $300 million.