The Strategist

Volkswagen agreed on compensation in the US

04/21/2016 - 16:58

German carmaker Volkswagen AG and the US government reached a friendly settlement of the "Dieselgate" scandal. Company will pay buyers of its cars in the US $ 5 thousand per owner as compensation for damage, according to Die Welt citing sources familiar with the situation.
"Regardless of this amount, Volkswagen will have to pay for revision (of software - Ed.) in each car" - said one of the sources. Documents necessary for the settlement agreement shall be submitted to judge Charles Breuer responsible for this matter today near noon by local time. 

Volkswagen would reserve at least $ 10 billion on payments in civil lawsuits filed by the US authorities, as well as by the American owners of vehicles affected by the "diesel scandal," reports Bloomberg referring to informed sources.

Evercore ISI analysts suggest that the cumulative damage to the company in connection with the reviews and litigation could reach € 30 billion. Volkswagen Group has reserved approximately € 6,7 billion of this amount in the first quarter of the year.

In September 2015, the US Environmental Protection Agency has initiated an investigation against Volkswagen. During several years, the manufacturer had been installing on their diesel models special software that allowed bypassing the check on level of emission of harmful substances. The scandal forced the US subsidiary of Volkswagen suspend sales of certain models. Among them are two-liter diesel Audi A3, Golf, Passat, Jetta and Beetle. US authorities ordered the company to withdraw nearly half a million vehicles sold in 2008from the US market. Volkswagen itself acknowledged that in total, 11 million vehicles were equipped with faulty software worldwide.