VW Settles with Regulators, States and Consumers for Emissions Dilemma

Discussion in 'Volkswagen' started by xcel, Jun 28, 2016.

  1. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    [​IMG] Company sets aside $17.9 billion USD to cover all the costs associated with the various parties through an all-encompassing agreement.

    [​IMG]Wayne Gerdes – CleanMPG – June 28, 2016

    The highly rated 2016 Passat crossing a bridge in Vermont earlier this year.

    There was “some” closure this morning to the largest automotive manufacturer deceit case in history with a fine that was also larger than any ever placed on any automotive manufacturer in history. Repair/fixes were not announced and claims from investors, individual consumers and VWs own US dealerships that are suing outside of the Federal court jurisdiction are not included in today’s release.

    VW AG along with the DOJ, FTC, EPA and CARB announced today that VW has reached settlement agreements with the U.S. Department of Justice (DOJ) and the State of California; the U.S. Federal Trade Commission (FTC); and private plaintiffs represented by the Plaintiffs' Steering Committee (PSC) to resolve civil claims regarding eligible Volkswagen and Audi 2.0L TDI diesel engine vehicles in the U.S.

    Of the approximately 499,000 2.0L TDL vehicles that were produced for sale in the U.S., approximately 460,000 VWs and 15,000 Audi’s that are still on the road will be eligible for buybacks and lease terminations or emissions modifications, if approved by regulators. VW will establish a maximum funding pool for the 2.0L TDI settlement program of $10.033 billion. That amount assumes 100% participation and that 100% of eligible customers choose a buyback or lease termination.

    The agreements covering the proposed 2.0L TDI settlement program are subject to the approval of Judge Charles R. Breyer of the United States District Court for the Northern District of California, who presides over the federal Multi-District Litigation (MDL) proceedings related to the diesel matter.

    Volkswagen also announced that it has agreed with the attorneys general of 44 U.S. states, the District of Columbia and Puerto Rico to resolve existing and potential state consumer protection claims related to the diesel matter for a total settlement amount of approximately $603 million.

    Matthias Müller, Chief Executive Officer of Volkswagen AG:
    Three Separate Agreements

    Three agreements have been submitted to the Court for its approval with respect to the proposed 2.0L TDI settlement program:
    1. A Consent Decree filed with the Court by the DOJ on behalf of the EPA and by the State of California by and through the California Air Resources Board (CARB) and the California Attorney General

    2. A Consent Order submitted by the FTC

    3. A proposed class settlement agreement with the PSC on behalf of a nationwide settlement class of current and certain former owners and lessees of eligible 2.0L TDI VW and Audi vehicles
    All parties believe that the class settlement as presented to the Court will provide a fair and reasonable resolution for affected VW and Audi customers. Volkswagen continues to work on and reach an agreed resolution for affected vehicles with 3.0L TDI V6 turbo diesel engines.

    On April 22, 2016, Volkswagen recognized total exceptional charges of €16.2 billion ($17.9 billion USD at today’s exchange rate) in its financial statements for 2015 to cover worldwide provisions related to technical modifications, repurchases, legal risks and other items as a result of the diesel matter. At that time, due to the complexities and legal uncertainties associated with resolving the diesel matter, a future assessment of the risks may be different. <-- There is still some open items within the proposed settlement as their always is.

    Frank Witter, Chief Financial Officer of Volkswagen AG:
    The agreements announced today are not an admission of liability by Volkswagen despite their direct involvement with the emissions controls used on the various engine designs through the effected years. The agreements are not intended to apply to or affect Volkswagen's obligations under the laws or regulations of any jurisdiction outside the U.S. Regulations governing NOx emissions limits for vehicles in the U.S. are much stricter than those in other parts of the world and the engine variants differ significantly. This makes any technical solutions in the U.S. more challenging than in Europe and other parts of the world, where implementation of an approved program to modify TDI vehicles to comply fully with UN/ECE and European emissions standards have already begun by agreement with the relevant authorities in those countries.

    Proposed 2.0L TDI Settlements

    2016 VW Passat

    We may see the mighty TDI moniker attached to its trunk again soon. Expect a higher mpg figure as well. ;)

    Subject to Court approval of the proposed 2.0L TDI settlement program, Volkswagen has agreed, among other terms, to:
    • Buy back or terminate the leases of eligible vehicles, or provide free emissions modifications (if approved by the EPA and CARB), and also make cash payments to affected current and certain former owners and lessees.

    • VW will establish a single funding pool to cover the 2.0L TDI settlement program. The maximum funding amount will not exceed $10.033 billion and is dependent on how many customers participate in the program and which option they choose if proposed modifications are approved.

    • Customers can choose to sell back their vehicle to Volkswagen or terminate their lease without penalty, or, if a modification is approved, choose to have their vehicle modified free of charge and keep it. Customers who select any of these options will also receive a cash payment from Volkswagen.

    • Eligible vehicles value for a buyback will be determined based on the Clean Trade-In Value as published in the September 2015 edition of the NADA Used Car Guide, with adjustments for factory options and mileage.
    In detail, each affected TDI owner will receive the repurchase price of their vehicle plus an additional $5,100 to $10,000 depending on the model and year. Lessees who terminate their leases early will receive half of what an eligible owner would receive for an equivalent vehicle. Now don’t you wish you owned a 2009 – 2015 VW TDI right now?

    Support the following environmental programs in the U.S. by agreement with the EPA and CARB:
    • Pay $2.7 billion over three years into an environmental trust, managed by a trustee appointed by the Court, to remediate excess NOx emissions from 2.0L TDI vehicles. <-- More investment into BEVs and FCVs in addition to what the company has already earmarked for investment into the technologies.
    • Invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives.

      Volkswagen will begin the settlement program as soon as the Court grants final approval to the settlement agreements. At the earliest, approval will occur in the fall of 2016.
    Potential claimants under the class settlement do not need to contact Volkswagen or Audi, or their dealers, at this time. Individual class members will receive extensive notification of their rights and options (including the option to "opt out" of the settlement agreement) if the Court grants preliminary approval of the proposed class settlement at a public hearing scheduled to take place on July 26, 2016.

    More information about the proposed 2.0L TDI settlement program, including the settlement agreements in full, can be found at VW Court Settlement or Audi Court Settlement.

    New York Attorney General Eric Schneiderman who led the investigation by the states in a release stated:
    June 28th, 2016 – VW AG Stock Price (ADR) on the OTC


    Large investors took today's disclosures with a positive tone as the ADR was up almost $1.00 or 3.46 percent to 27.79/share at the close. Long term however, the emissions scandal has caused almost 5 years’ worth of gains to be wiped out from just before the admission of wrongdoing was announced to today's close in comparison to 5 years ago. At least there was a dividend to sit on all of this time.

    Moving forward, if only I had bought that Passat TDI back in 2013 like I was so close to doing. I also cannot wait to shop the local VW dealership lot when the mighty TDI returns. That announcement has not yet been made however.
  2. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi All:

    On a more Op-Ed note, while a few peoples actions within VWs hierarchical structure were unconscionable, $14 to $18 billion USD? There have been OEMs that have had hundreds of customers die while knowing full well the consequences of a design flaw years prior and leaving said flaws in the consumer space for years after. The fines were an order of magnitude less.

    If we could look into the rear view mirror or Monday morning Quarterback this thing despite it being Tuesday, VW should have left the U.S. before announcing and investing $ billions of USDs for the beautiful and LEED Platinum Certified Chattanooga Passat plant. There is simply little to no profit in the U.S. for them and now with this settlement, it could be decades before VW of America recovers the cost of these judgments. In Europe where VW has a much larger sales footprint, there were recall costs but no judgement of any kind announced.

    Like the Hyundai/Kia EPA restatements, the Toyota Unintended Acceleration non-event, and now VWs legal costs in this debacle, there appears to be selective bias with regards to the American legal system towards non-American business interests. Maybe this is the U.S.' way to recover lost revenues at the Koreans, Japanese and now German's expense given their own home grown bias against the American OEM automobile. Just a thought to ponder with no hard evidence other than the harsh fines for lesser evils and far lower fines for far more harmful activities and actions by our own?

    kbergene, wxman and 300kmileprius like this.
  3. BillLin

    BillLin PV solar, geothermal HVAC, hybrids and electrics

    I want the VW XL1 at a more down-to-earth price. Make it out of all steel if they must.

    In the news elsewhere, I saw VW's also supporting the use of particulate filters on their GDI engines (like MB does). That's good. I think that is potentially a more deadly problem facing us right now than the diesel polluters in the US given there's no requirement(?) to filter the particulates.
    xcel likes this.
  4. e90diesel

    e90diesel Well-Known Member

    Thanks for posting this detailed information. Hopefully VW will make it right for those of us who own 3.0 TDI vehicles. The value of my 2011 Touareg TDI has taken a substantial hit since the whole scandal hit last Sept.
    xcel likes this.
  5. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi e90diesel:

    I am sure they will as they opened up the checkbook for 2.0L TDI owners while the 3.0L TDI owners have a lot more $s on their respective hoods.

  6. RedylC94

    RedylC94 Well-Known Member

    What happens to the bought-back cars?
  7. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi RedylC94:

    No idea? Mexico, South America, Middle East or China maybe?

  8. rhwinger

    rhwinger Well-Known Member

    I thought they were prohibited from reselling the bought-back cars. Can't find where I read it though.
    xcel likes this.
  9. seftonm

    seftonm Veteran Staff Member

    I believe they have to be fixed first to comply with EPA requirements.
    xcel likes this.
  10. EdwinTheMagnificent

    EdwinTheMagnificent Legend In His Mind

    Where do I sign up to buy a Golf Sportwagen TDI that has been "fixed" , for a ridiculously low price ?

    But really , how many people will want a buyback ? This will be interesting. I also wonder how it will affect Canadian TDI owners.
    xcel likes this.
  11. seftonm

    seftonm Veteran Staff Member

    The Canadian settlement will be similar to the American one. More details should be out in a month or two.

    I will most likely be going for a buyback. I was already contemplating getting a newer car sometime in 2017 or 2018, now that the buyback details are somewhat known, it will be hard to turn down the extra cash.
    xcel likes this.
  12. EdwinTheMagnificent

    EdwinTheMagnificent Legend In His Mind

    Got any idea what you will be buying , Mike ?
    xcel likes this.
  13. seftonm

    seftonm Veteran Staff Member

    I have my eyes on the Civic hatch and Kia Niro.
    Last edited: Jun 29, 2016
    xcel likes this.
  14. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Mike:

    Great selections. Hold out for the Ioniq as well. Its rear hatch provides a ton of utility as well.

  15. brick

    brick Answers to "that guy."

    VW has only two options:
    1) Fix the cars to comply with US regulations and sell them either within the US or elsewhere
    2) Scrap them.

    Exporting them for resale in other markets is explicitly forbidden unless they have been modified to meet US EPA regulations. Since VW still has yet to develop "the fix" I think these cars are done. I read elsewhere (though now I can't find it) that the agreement was intended to provide sufficient incentives to get 85% of affected vehicles off of the roads. That suggests rather strongly that "the fix" is either very expensive or will have a substantial negative impact on vehicle performance.

    Relevant to a couple of people I know, it sounds like anyone who bought an affected vehicle second-hand after September 18th will have to split the compensation 50/50 with the previous owner. I don't know exactly how that's going to work but I do predict some bellyaching as a result.
    xcel likes this.
  16. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Tim:

    While sold in the U.S., the models were made in Europe, Mexico, and the U.S. - the few Passat TDIs - and VW owning their vehicles after the buyback may open up other avenues for resale. Fixing for EU standards for example would be a cake walk. South America and China, pack them up, ship them out and sell them as fast as the dealerships can move the metal.

    Do you remember where you read the Resale language as I would like to explore that more too.

    Thanks in advance.

  17. Trollbait

    Trollbait Well-Known Member

    For a counter point, it is a question of laws being broken and the intent behind the pary's actions.

    From the little I've heard, Hyundai/Kai are probably the most innocent from a moral view. The MPG misstatement could have been because of a misunderstanding of the calculation rules. A reason for the new EPA rules for fuel economy determination that went into effect this year was to clarify them, and reduce confusion. Hyundai then simply had the bad luck of timing and scale. It had been some time since an any automaker had been caught cheating on MPG figures, so as with sending Martha Stewart to prison, the max fine was leveled against them as a deterrent to the others. That's the timing part. The scale was that the fine is based on the number of violating cars sold. With the Elantra being one of the models, that meant a lot of cars to multiply the fine by.

    Ford's actions in regards to the C-max MPG was ethically much worse. They knew the figures weren't going to be true for owners, but their actions were all done within the law. So there wasn't anything they could prosecuted for. The second round of MPG restatements on the hybrids and Fiesta was started by Ford when they told the EPA they discovered they had made an error. The action taken against Hyundai/Kai might have given Ford incentive in being more forthcoming and proactive on these incidences. I do think having a friendlier working relationship with EPA regulators helped too.

    Toyota wasn't fined for their the unintended acceleration events. They were fined because a couple of SUA cases were filed with another country's safety agency, and they were required by US law to disclose this. Not only did they not do this, they actively worked to hide the fact from US investigators.

    Toyota paid a $1,200 million fine for that. GM paid $935 million for their actions in regards to the ignition switch. Not a huge difference considering Toyota was trying to hide wrong doing, and GM appears to have been just clueless. "On June 5, 2014, Valukas' report on the recall was made public. In it, he asserted that the company's failure to fix the defective switches sooner was not due to a cover-up on the company's part,[53] but rather due to "their failure to understand, quite simply, how the car was built."[54]" - https://en.wikipedia.org/wiki/General_Motors_ignition_switch_recalls. They even had an improved part in use years before the news broke on it, but had given the new part the exact same number as the old part, making it impossible to tell which cars truly had the bad switch.

    Then the bankruptcy adds a layer of difficulty to any prosecution. New GM is legally separate from old GM. While new GM is responsible for the recalls and keeping the car safety up, the original part, and maybe the same numbered replacement one, happened under old GM's time. It would be a horrible PR maneuver, but new GM could hide behind old GM. This hinders what prosecuters can do.

    On to VW. They didn't make an error that resulted in breaking regulations. They didn't attempt to break the spirit of the law while still working within it. They flat out, intentionally, broke the law for nearly a decade. If not caught by some third party researchers, they would still be doing it. They were even cheating with the SCR models. A technology that could meet the tough US emission limits, but VW wanted to limit the amount of DEF their cars used.

    I support diesels, because I think they have the best chance for viable, 100% renewable fuel. Audi is even doing some of that work. While the increased NOx from these cheater VWs might have little impact on public health and the environment, it tarnishes diesels as a whole in the public eye. The cars already face an uphill battle because of fuel costs, coal rollers, and poor history in the US.
    wxman and xcel like this.
  18. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Trollbait:

    That was a very well written and thought out reply!

    My only addition is willfully breaking the law which VW is clearly guilty of vs consumer/public harm. Restatements are heartbreaking but in the Ford case, two restatements and no action. GM's design flaw killed people. Little in the way of a fine but a very expensive recall, that is for sure. Hyundai/Kia paid through the nose for their misreading of the CFRs. Toyota? They got taken down because of aggressive Attorneys in my eyes. Still wondering what hidden flaw there was but look at every major OEM's mat locks today as the aftermath. Except Toyota paid big for it. :(

    While I do not endorse drugs in any way shape or form, it sounds like we fined the illegal pot grower $14 to $18 billion and let a murderer skate for just over a billion?

    Make sure you read the NESTE' - Propel Diesel Fuel story in the fuels forum. Drop in and its on the road here in California today!

    wxman likes this.
  19. brick

    brick Answers to "that guy."

    Technically yes, legally no. The settlement explicitly forbids any avenue to resale unless they are fixed to US standards against which they were originally certified. Otherwise they have to be destroyed. Does that make any environmental sense? Not to me, but I doubt that was a consideration when the settlement was hashed-out.

    Jalopnik posted some of the key language yesterday.
    xcel and wxman like this.
  20. wxman

    wxman Well-Known Member

    Not to me either.

    This is admittedly preliminary, but I calculate that replacing a cheating Golf TDI with a new e-Golf will result in $815/vehicle in damages to public health and environment based on the latest version of the GREET model for emission factors, and published EPA damage cost factors for conventional pollutants (VOC, CO, NOx, PM2.5, SOx). This is assuming the average Golf TDI is four years old.

    Replacing a cheating Golf TDI with a new Golf TSI (1.8T) results in $1180/vehicle in additional damages.

    Emission of conventional pollutants are relatively high in the manufacture of the vehicle according to GREET. Scrapping a perfectly good TDI does more harm than good, lower NOx emissions notwithstanding!
    xcel and BillLin like this.

Share This Page