Volkswagen agreed to fix or buy back about 500,000 tainted cars in the US, taking a significant step forward in its effort to emerge from the emissions-cheating scandal.
The German car maker’s shares rose 2% late yesterday, marking a 15% gain for the battered stock since the start of the month.
Following months of acrimonious wrangling with US authorities, Volkswagen was commended at a hearing in San Francisco for its co-operation and given until June 21 to fine tune the agreement.
While the deal is set to cost at least $10bn (€8.8bn), according to a source, the judge overseeing the process said specific details will remain confidential until the agreement is finalised.
“There is a definite momentum” to resolving this issue, US District Court Judge Charles Breyer said at the hearing. The final deal will include “substantial compensation” for affected owners of cars rigged to cheat on official emissions tests, said the judge, who is presiding over more than 600 lawsuits.
The agreement with US authorities is a milestone for Volkswagen as it seeks to emerge from the seven-month-old scandal. It has been battling to appease regulators and regain customers’ trust after admitting in September it rigged the exhaust systems of 11m diesel-powered cars worldwide to pass official emissions tests.
The crisis led to the departure of CEO Martin Winterkorn and caused Volkswagen to delay releasing its 2015 earnings due to uncertainty over the costs of the scandal.
The plan covers about 480,000 2-litre diesel vehicles in the US and will include some buybacks. What to do about 85,000 VW, Audi and Porsche models with 3-litre engines is still to be worked out. The deal addresses civil claims by the US government and lawsuits over diesel vehicles rigged to cheat pollution controls, and Volkswagen’s legal headaches in the US are still far from over.
The agreement doesn’t involve penalties or fines likely to be imposed on the carmaker. The US Department of Justice said in a statement that while the agreement addresses “one important aspect” of the scandal, it’s other investigations remain “active and ongoing.”
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