Volkswagen Will Fork Out $10.2 Billion to Settle Emissions Claims, Hand Owners Up to $7,000

Owners of the 482,000 2.0-liter TDI models caught up in the diesel emissions scandal will get cash compensation tied to the age of their vehicle, anonymous sources said today.

Volkswagen won’t release details on its buyback/fix/remediation plan until Tuesday of next week, but sources briefed on the matter blabbed to the media despite a court-imposed gag order. The Associated Press puts the cost of settling the U.S. fallout at $10.2 billion, with some of that money going towards government penalties.

It’s already known that Volkswagen plans to buy back (or fix, at the owner’s request) 2.0-liter diesel models sold from 2009 on. What’s murky is whether the figures quoted by the sources relate to the vehicle buyback or the separate compensation expected to be handed to owners.

The cash payments will range from $1,000 to $7,000, depending on the age of the vehicle and other factors. Those amounts could change by next Tuesday, the sources stressed.

According to Bloomberg, “owners will be faced with complex calculations to figure out how much cash they might receive from Volkswagen … which could upset them and harm the carmaker’s relationship with buyers even further.”

Readers can learn more about the body blow to Volkswagen’s reputation (and what it will take to recover) here.

Part of the U.S. funds, drawn from an $18.2 billion cash pile Volkswagen set aside this spring, will go to remedy the environmental damage caused by the diesels over the last six years. The sources say any environmental fund will probably model itself after an existing EPA-funded cleanup program.

The Diesel Emissions Reduction Act provides grants to areas with high levels of diesel pollution. Mainly, the cash goes to efforts like retrofitting old buses and replacing industrial truck fleets. An administrator appointed by the Justice Department will hand out the cash, sources said, with funds going to the state level for distribution to local green programs. Each project will be audited by the administrator.

No details on the size of the environmental fund are available. Regulators first need to figure out the amount of smog the diesels created since 2009, and how much emissions the remaining vehicles will emit.