Cash Coming to 3.0-liter Diesel Owners as Judge Approves $1.22 Billion Volkswagen Settlement

Is was probably with a sigh of relief that U.S. District Judge Charles Breyer granted final approval to a settlement for owners of 3.0-liter diesel Volkswagen Group vehicles earlier today. The issue has consumed no shortage of court time both before and after last December’s preliminary approval for a buyback, compensation and fix plan.

More than 80,000 Volkswagen, Porsche and Audi models were sold with engines rigged to cheat on emissions tests. Many of those units will now be bought back and others fixed — a plan with a minimum $1.22 billion price tag.

Breyer’s approval marks the end of the automaker’s main legal wranglings in the U.S. It also opens the cash floodgates, as even owners who opt for a fix will see a pile of crisp, clean dollars from VW.

A further $327.5 million will be paid to U.S. diesel owners by Robert Bosch GmbH, the German supplier that had a hand in developing the engines. Already, more than 70 percent of owners have registered for VW’s compensation package.

VW is also on the hook for a further $225 million in environmental initiatives to satisfy the U.S. Justice Department.

“We believe the substantial compensation and steps to repair or remove polluting cars from the roads detailed in the settlements provide excellent value to consumers and hold Volkswagen and Bosch accountable for their breach of consumer trust,” said Elizabeth Cabraser, lead counsel for the consumer plaintiffs, in a statement.

Under the plan, vehicles have been split into two groups. The first, 2009-2012 “Generation One” models, contain older engines that so far have proven difficult to fix. As of today, no repair has received approval from the Environmental Protection Agency. Owners of such vehicles can opt for a buyback, or hold their horses and wait for a fix (as well as $7,755 to $13,880 in compensation cash).

The automaker will pay owners seeking a buyback the equivalent of 2015 “clean” trade-in value, adjusted for mileage and options. That equals a $24,755 to $57,157 value, depending on model. A trade-in credit option has also been made available for those looking to pick up a new Volkswagen Group model.

The crop of 2013-2016 “Generation Two” vehicles is viewed as being easier to fix, so those owners face a different choice. If VW can rustle up a fix in a timely manner, each owner will receive the emissions modification plus $7,039 to $16,114 in cash (with the option of half up front). By “timely,” the settlement means no later than December 20th of this year. Should VW come up dry on a fix, it’s buyback time for these newer vehicles — a move capable of adding billions of dollars to VW’s tab.

Should VW miss the deadline, similar buyback rules apply. Owners will receive between $43,153 to $99,862 for their luxury vehicles.

All of these sums are for the VW settlement only. Owners stand to gain fatter stacks as Bosch ponies up its admittedly smaller share of the penalty.

[Image: Volkswagen Group]