U.S. appeals court agrees to Volkswagen’s $10 billion settlement

A federal appeals court in the U.S. has upheld the $10 billion dieselgate settlement.

A three-judge panel of the U.S. 9th Circuit Court of Appeals has agreed with Volkswagen to a $10 billion settlement with owners of around 5,00,000 diesel vehicles that were equipped with defeat devices to cheat pollution tests.

Cumulatively, Volkswagen AG will pay around $25 billion to owners of affected VW diesel vehicles in the United States, environmental regulators, states and dealers and has agreed to buy back all polluting vehicles across the country. The buyback process is likely to continue till the end of 2019.

In September 2015, Volkswagen confessed to having installed a device on nearly all their diesel-powered vehicles, which could detect if and when the vehicle is being tested for exhaust gas emissions and alter its performance accordingly. A system which is illegal in the United States. These vehicles were found to be polluting 40 times the legally permissible limit.

On June 9, VW agreed to offer owners of the 2.0-litre diesel vehicles with a compensation amount between $5,100 and $10,000 over the estimated current value of their vehicles. However, the Court of Appeals rejected VW’s challenge that would allow VW to keep the remainder of the $10 billion amount if not spent in the settlement for the 2.0-litre engines. To settle additional lawsuits in US states such as Vermont and Arizona, VW will also have to pay an additional amount of $1,000 to some owners. In 2016, VW had reached a settlement of $603 million for consumer fraud in 44 US states and has made settlements with additional five other states since, including the state of Vermont. However, the lawsuit in the state of New Mexico is still pending.

Currently, VW has paid around $7.4 billion to buy back about 3,50,000 2.0-litre diesel vehicles out of the affected 2009-2015 MY 4,75,000 vehicles in the US and has fixed or removed around 86 per cent of all affected vehicles from the road. VW has also made a separate settlement covering about 80,000 3.0-litre V6 diesel vehicles, agreeing to buy back 20,000 of them.