The EPA only regards the US-market deal as a partial settlement, and the fine detail of it is daunting. VW has until June 2019 to remove 85% of the offending 2.0-litre diesel vehicles from US roads, or come up with an acceptable fix for the engine’s excessive pollution. That fix must reduce NOx emissions by 80-90%.
Volkswagen must also offer to buy back the offending cars “at fair cost” or end lease deals at no cost. Buy-back cars can only be exported from the US if any emissions fix is successful. If not, they must scrapped or recycled. Some of the owners are “also entitled to additional compensation in connection with the buy-back or lease termination of vehicles”, according to the EPA.
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In addition, VW has to pay £2bn into a mitigation fund, which will be used for offsetting the extra NOx emissions caused by the affected cars through investments such as buying electric school buses. It must also invest £1.5bn in “charging infrastructure and the promotion of electric vehicles”: £600m in California and £900m across the rest of the country.
This partial settlement only covers 44 US states. Talks with New York, Maryland, Pennsylvania and Massachusetts are set to get under way before 1 November.
As daunting as the EPA deal might seem, as the Wall Street Journal recently pointed out, of the 11 million VW Group cars fitted with the defeat device, just 600,000 were actually sold in the US.
The remaining 10.4m vehicles were sold across the rest of the world. However, according to the Wall Street Journal, a rising tide of claims, prosecutions and court judgments are shaping up to significantly increase the final cost of the deception to VW.
South Korea banned the sale of Volkswagen and Audi models in July and there are said to be pending legal moves against the firm in at least another 10 countries.
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VW has only just reached a settlement with a US dealer group which had attempted to sue the car maker for, among other issues, a “loss of franchise value”. According to dealers’ representatives, the deal included “cash payments and additional benefits”.
One of the largest pension funds in the US, run for Californian teachers, is also said to be considering action against VW.
As Autocar reported in July, new VW Group boss Matthias Müller told German newspaper Welt am Sonntag that offering a US-style compensation and buy-back deal to European owners would simply sink the company. “You don’t have to be a mathematician to realise that compensation at arbitrarily high levels would overwhelm VW,” he said.