US Lawsuits Could Cost Volkswagen $1.5B 'on the Low End'

Aaron Cole
by Aaron Cole

Analysts are estimating that more than 400 lawsuits (for now) pending against Volkswagen for fraudulent “clean diesel” claims could cost the automaker billions in court — if they even go that far.

Bloomberg reported (via Automotive News) that as lawyers for owners and Volkswagen wrangle over where to eventually hold a consolidated trial against the automaker, many analysts believe Volkswagen — who has already admitted to committing fraud — may end up paying at least $1.5 billion to customers, before damages or a potential buy back. That figure could rise to $8.9 billion if Volkswagen has to buy back their cars, according to Bloomberg Intelligence analyst Brandon Barnes.

(Presumably, those billions would be spent outside of a single wrench being turned on one of its illegally polluting cars.)

Despite the looming litigation, it’s likely that Volkswagen will settle claims before any trial, experts say. The automaker has already admitted wrongdoing, well before many of the lawsuits against Volkswagen were filed.

“I’ve never been in any case where, before it ever gets filed, the defendant admits publicly that it engaged in a fraudulent activity,” Paul Hanly, a lawyer with experience in multi-district cases such as Volkswagen’s, told Bloomberg. “The only thing to prove is the extent of the fraud.”

Its unclear what the fix for U.S. cars could be, or how much it could cost in the States. Volkswagen’s fix for cars in Europe cost less than many expected, but Volkswagen said it wouldn’t revise its earlier plans to take a $7 billion charge to help pay for the fixes.

In the U.S., any potential civil penalty would be outside what federal regulators could hand down as punishment to Volkswagen. Although initial estimates pegged the federal penalty as high as $18 billion, it’s likely that Volkswagen won’t face such a steep penalty. ( It may be closer to $3 billion if you use the feds’ own worksheets.)

According to Bloomberg, Volkswagen has about $20 billion cash on hand, and the automaker announced it had secured $20 billion in bridge financing from banks to help cover the cost of the scandal, according to Reuters.

Volkswagen may need every penny of that in the U.S.

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  • Pch101 Pch101 on Dec 03, 2015

    I'll take a wild guess and say that the cost of a US recall + fines will run somewhere between $500 million - $1 billion (EPA will account for the recall costs when setting the fine), and civil litigation will add a similar amount to the tab (lots of plaintiffs, but relatively low damages per plaintiff -- the lawyers will be the winners here.) That would be painful but manageable. VW's larger problem is its US market share was already lousy to begin with, and this won't help.

  • Kendahl Kendahl on Dec 04, 2015

    In the end, it might have been cheaper for VW to tell all the owners of non-compliant cars, "Bring in your illegal car and we'll swap it for a comparable, brand new, legal one." Rather than sending the trade-ins to the crusher, VW could sell them in third world markets to replace even dirtier vehicles.

  • Alan The Prado shouldn't have the Landcruiser name attached. It isn't a Landcruiser as much as a Tacoma or 4 Runner or a FJ Cruiser. Toyota have used the Landcruiser name as a marketing exercise for years. In Australia the RAV4 even had Landcruiser attached years ago! The Toyota Landcruiser is the Landcruiser, not a tarted up Tacoma wagon.Here a GX Prado cost about $61k before on roads, this is about $41k USD. This is a 2.8 diesel 4x4 with all the off road tricky stuff, plus AC, power windows, etc. I'm wondering if Toyota will perform the Nissan Armada treatment on it and debase the Prado. The Patrol here is actually as capable and possibly more capable than the Landcruiser off road (according to some reviews). The Armada was 'muricanised and the off road ability was reduced a lot. Who ever heard of a 2 wheel drive Patrol.Does the US need the Prado? Why not. Another option to choose from built by Toyota that is overpriced and uses old tech.My sister had a Prado Grande, I didn't think much of it. It was narrow inside and not that comfortable. Her Grand Cherokee was more comfortable and now her Toureg is even more comfortable, but you can still feel the road in the seat of your pants and ears.
  • Jeffrey No tis vehicle doen't need to come to America. The market if flooded in this segment what we need are fun affordable vehicles.
  • Nrd515 I don't really see the point of annual inspections, especially when the car is under 3 years (warranty) old. Inspections should be safety related, ONLY, none of the nonsensical CA ARB rules that end up being something like, "Your air intake doesn't have an ARB sticker on it, so you have to remove it and buy one just like it that does have the ARB sticker on it!". If the car or whatever isn't puking smoke out of it, and it doesn't make your eyes water, like an old Chevy Bel-Air I was behind on Wed did, it's fine. I was stuck in traffic behind that old car, and wow, the gasoline smell was super potent. It was in nice shape, but man, it was choking me. I was amused by the 80 something old guy driving it, he even had a hat with a feather in it, THE sign of someone you don't want to be driving anywhere near you.
  • Lou_BC "15mpg EPA" The 2023 ZR2 Colorado is supposed to be 16 mpg
  • ToolGuy "The more aerodynamic, organic shape of the Mark VIII meant ride height was slightly lower than before at 53.6 inches, over 54.2” for the Mark VII."• I am not sure that ride height means what you think it means.Elaboration: There is some possible disagreement about what "ride height" refers to. Some say ground clearance, some say H point (without calling it that), some say something else. But none of those people would use a number of over 4 feet for a stock Mark anything.Then you go on to use it correctly ("A notable advancement in the Mark VIII’s suspension was programming to lower the ride height slightly at high speeds, which assisted fuel economy via improved aerodynamics.") so what do I know. Plus, I ended a sentence with a preposition. 🙂