Volkswagen deal in emissions scandal includes compensation, U.S. judge says

A deal reached between Volkswagen and the U.S. government over a global diesel emissions scandal that has rocked the automaker will include vehicle buyback offers and the possibility of repairs, says a federal judge.

11 million vehicles worldwide were equipped with emissions-cheating device, including 600,000 in U.S.

Renee Filippone on VW's proposed deal with the U.S. government over its emissions scandal 4:09

A deal reached between Volkswagen and the U.S. government over a global diesel emissions scandal that has rocked the automaker will include vehicle buyback offers and the possibility of repairs, says a federal judge.

Judge Charles Breyer said Thursday in San Francisco that the U.S. agreement will include "substantial" compensation for diesel vehicle owners, but he did not provide details on how much they will get. 

In September 2015, the U.S. Environmental Protection Agency ordered Volkswagen to fix about 500,000 VW and Audi diesel cars that the agency said been designed to intentionally violate clean air laws.

VW admitted it had installed a cheat device in diesel engines, a software program that ensures the engines meet environmental standards during testing conditions but spews polluting emissions in real-world driving. The vehicles, with 2.0-litre and 3.0-litre engines, emit up to 40 times the legal limit of nitrogen oxide pollutants.

About 11 million vehicles worldwide were equipped with the emissions-cheating device. 

Breyer said the proposed settlement includes a buy-back offer for 482,000 Volkswagen vehicles with 2.0-litre engines in the U.S.

He said it does not cover another 90,000 Volkswagen, Audi and Porsche cars and SUVs in the U.S. that have the 3.0-litre engines, but added that he expects resolution on that particular engine, plus the issue of possible fines levied by the Justice Department, to be dealt with "expeditiously," Reuters reported.

Kenneth Elias, a partner with Arizona-based automotive consultants Maryann Keller & Associates, said he thinks affected U.S. consumers will get cash compensation or an incentive on a new VW vehicle, or some kind of combination of the two.

Citing analysts and two unnamed sources, Reuters said VW may have to spend more than $10 billion US to cover the costs of the agreement with the U.S. government.

The U.S. government will seek a consent decree with the car company to formalize the agreement affecting only U.S. consumers. That decree must be filed by June 21, the judge said. 

A consent decree is a legal settlement that would see VW agree to specific actions without admitting guilt or fault.

Volkswagen's once-pristine brand has been severely tarnished by the emissions fiasco. (Ralf Hirschberger/dpa via Associated Press)

Additional details of the deal between Volkswagen and the U.S. government will stay secret until that consent decree proposal is filed, Breyer said.

Reuters reported the judge has imposed a gag order on all the parties involved until a final agreement is reached.

About 100,000 VW diesel engines were reportedly on the road at one time in Canada, and many of them may have included the emissions-cheating technology.

Volkswagen Canada issued a statement saying it is "committed to earning back the trust of its customers, dealers, regulators and the public. 

"These agreements in principle are an important step on the road to making things right. As noted today in court, customers do not need to take any action at this time," the statement said.

The company said resolutions reached with the U.S. Environmental Protection Agency apply here as well because the company's Canadian vehicles are certified by the EPA.

Volkswagen Canada said more details are expected to be released in June.

Tony Merchant, whose law firm is representing about 500 clients in lawsuits against VW, said he would advise against accepting the offer if it had been made in Canada.

"We think they are just trying to buy their way out of wrongdoing," Merchant told CBC News.

"[The proposed settlement] does not include Canadians, but it might be a sign of what they're prepared to offer Canadians," Merchant said.

Waiting on outcome

Judy Coffey, the owner of a VW Jetta diesel car in Toronto, said she was upset when she about learned about the emissions scandal.

"I'm sure most people who purchased this car had the same idea, that they wanted to have a fuel-efficient car, and a car that runs clean, and it turns out that it wasn't," she told CBC News.

Since the scandal broke, Coffey said she has received two credit cards from VW — one for $500 to spend at the dealership and another for $500 that she could spend anywhere she wanted.

The wait on the outcome of the case in the United States is delaying any action Coffey can take here regarding what she will do with her car.

"The value of my car is in question right now," she said.

"I just hope there's a good precedent set for car manufacturers and that this doesn't happen again," she added.

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