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US judge ‘optimistic’ for deal in VW case

A US federal judge overseeing the Volkswagen emissions scandal said Friday he is optimistic about reaching an agreement for the last 80,000 vehicles affected in the United States.

Published: 17 December 2016 10:29 CET

US judge 'optimistic' for deal in VW case

Photo: DPA

A new hearing has been set for Monday to review the German automaker's proposals.

“I'm pleased to report that there has been substantial progress and I'm optimistic that there will be a resolution of this matter,” San Francisco judge Charles Breyer said during a brief hearing, without giving further details.

At the end of October, the US court endorsed a record-setting $15 billion compensation deal that covered the approximately 480,000 2.0-liter Volkswagen diesel cars equipped with software designed to defeat emissions tests.

But that agreement did not apply to the 80,000 3.0-liter engine models on the roads in the United States, and for several months, the company has been negotiating with the US authorities to reach an acceptable compensation agreement for these car owners.

Initial proposals in July were deemed incomplete and considerably flawed by US authorities, who called for the same type of agreement given to other owners, including the choice between buyback and repair.

Any agreements reached in the United States only regulate the civil aspects of the emissions cheating case.

Whatever the outcome of Monday's hearing, the German automaker will continue to be prosecuted while also facing a cascade of inquiries at home as well as in the rest of the world, especially in Europe.

The scandal first broke in September 2015 in the United States. In total, Volkswagen confessed to having rigged 11 million cars around the globe.

Five things to know about Germany's 'dieselgate' scandal

Exposed in 2015

On September 18th, 2015, the US Environmental Protection Agency (EPA) reported that VW had installed illegal “defeat devices” in hundreds of thousands of engines in the United States since 2009.

The software — used in the Volkswagen, Porsche, Audi, Seat and Skoda brands — helped the cars meet exhaust pollution standards when monitored in tests even though their emissions actually exceeded the limits.

It meant that some cars spewed out up to 40 times more harmful nitrogen oxide — linked to respiratory and cardiovascular diseases — than legally allowed.

The company later admitted that 11 million diesel vehicles worldwide, including 8.5 million in Europe and 600,000 in the United States, had been fitted with the software, most of them in the VW brand.

SEE ALSO: 'Dieselgate': German prosecutors charge former Audi boss with fraud

Legal fall-out

VW chief executive Martin Winterkorn, who stepped down five days after the scandal broke, was in April 2019 charged with serious fraud, unfair competition and breach of trust.

Eight former and current executives and an Audi official have been charged in the United States, including Winterkorn.

Audi chief executive Rupert Stadler was charged in July 2019 with fraud, falsifying certifications and illegal advertising in connection with the “defeat devices”.

Former Audi head Rupert Stadler at a press briefing in 2018.

VW's guilty plea to a US criminal case in March 2017 settled its legal entanglements there, bringing to around $22 billion the amount it agreed to pay in fines and compensation to owners and dealers and for environmental clean-up.

The group still faces investigations and lawsuits around the world, in Europe the countries include Britain, France, Germany, Italy and Poland.

Costs for VW

The scandal has so far cost VW around €30 billion in fines, compensation and buybacks, mainly in the United States.

The company announced a net loss of nearly €1.6 billion in 2015, its first in 20 years, after setting aside billions to cover the costs of the dieselgate.

In June 2018 it agreed to pay a €1 billion fine in Germany, admitting its responsibility for the diesel crisis.

Audi agreed in October 2018 to pay an €800 million fine and Porsche was in May 2019 ordered to pay a fine of €535 million.

Other carmakers?

Tests in the wake of the scandal found that diesel engines by other carmakers were also more polluting on the road than during testing.

But none have so far admitted to mass cheating.

However Mercedes-Benz maker Daimler was in June 2018 ordered to recall 774,000 diesel vehicles across Europe because they too were fitted with illegal “defeat devices”.

Fiat Chrysler agreed in January 2019 to a pay $515 million to settle claims it installed the software.

And in February 2019 German prosecutors fined high-end carmaker BMW 8.5 million euros over diesel cars with higher harmful emissions than allowed, though they found no criminal wrong-doing.

Opel is also being investigated.

A worker holds up a Volkswagen badge at the VW plant in Wolfsburg. Image: DPA

Market reaction

A study released in March 2017 said that pollution from 2.6 million rigged VW cars sold in Germany would likely cause 1,200 premature deaths in Europe because of the excess emissions.

In Germany more than 410,000 customers are demanding compensation, as are
investors.

More generally, European drivers appear to have largely shrugged off the controversy while VW sales have fallen in the United States.

VW said in July 2019 it expects “slightly higher” unit sales for the year than in 2018.

SEE ALSO: VW sees steady profits in 2018 results

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