VW says it's ready with US$10b diesel accord, but will devise fix later
Washington
VOLKSWAGEN AG will submit its US$10 billion plan this month to fix a half-million emissions-cheating cars or get them off US roads even though it's awaiting regulators' sign-off on how to retrofit the vehicles, a source said.
About US$6.5 billion will go to car owners and US$3.5 billion to the US government and California regulators, said the source. Because the US Environmental Protection Agency and the California Air Resources Board haven't approved VW's proposed fixes, the deal for now includes an option for car owners to request their vehicles be repaired, but there's no timetable for doing so or a guarantee there will be an approved fix, the source said.
Lawyers for car owners are due to submit the proposed deal to the San Francisco federal judge overseeing US lawsuits by June 28. The settlement will include options for car owners to sell their vehicles back to Volkswagen or to terminate their leases early.
Terms of that agreement may change between now and then, the source said. The judge is scheduled to consider the proposal, along with the carmaker's agreements with regulators, on July 26 before deciding whether to accept it.
Jeannine Ginivan, a Volkswagen spokeswoman in the US, declined to comment on the proposed agreement. The spokesman for the Environmental Protection Agency and California Air Resources Board didn't immediately respond on Saturday to messages seeking comment on it.
The proposal is intended to further the German carmaker's bid to regain consumer confidence while appeasing regulators after admitting in September that it rigged the exhaust system in 11 million diesel cars worldwide to feign compliance with global emissions standards. Chief executive officer Martin Winterkorn stepped down less than a week after the news broke, and Volkswagen has so far set aside 16.2 billion euros (S$24.7 billion) to cover the costs of the scandal, including repairs and lawsuits.
VW shares have fallen more than 6 per cent in Frankfurt since both sides told US District Judge Charles Breyer on April 21 that they had a preliminary agreement.
Under the proposed deal, vehicle owners can register to have their car repaired but will be told that it may never actually happen, the source said. Volkswagen has capacity to handle about 5,000 vehicles each week under the settlement, said the source, meaning it may take almost two years before all 482,000 are addressed.
"There's just no precedent for what happens if there's not a fix,'' said John German, a project manager with the International Council on Clean Transportation, an environmental public-policy group in Washington.
The company isn't entirely out of the woods if the plan is approved. State or federal regulators could still impose as-yet undetermined fines depending on the number of cars that remain on the road and the pollution from them, the source said.
Volkswagen is also subject to lawsuits in Germany and still faces a criminal probe there as well as in the US. Prosecutors in Germany are looking into allegations against a VW employee who might have encouraged other employees to delete or remove data. Prosecutors also said most of the data has been recovered in the meantime.
The diesel-cheating scandal has sent shock waves across the industry and triggered VW's first annual operating loss since 1993. Admissions of manipulation and allegations of cheating by other carmakers have pressured the authorities to step up scrutiny of real-world emissions and fuel economy.
In an effort to rebound, Volkswagen CEO Matthias Mueller has mapped out a sweeping strategy overhaul focused on electric cars, automated driving and services such as ride-hailing. The shift will entail more than 10 billion euros in investments by 2025. BLOOMBERG
