VW agrees to buy back diesel vehicles, fund clean air efforts

Tue Jun 28, 2016 9:15pm EDT
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By David Shepardson and Joel Schectman

WASHINGTON (Reuters) - German automaker Volkswagen AG (VOWG_p.DE: Quote) will pay as much as $15.3 billion after admitting it cheated on U.S. diesel emissions tests for years, agreeing to buy back vehicles from consumers and provide funding that could benefit makers of cleaner technologies.

The largest-ever automotive buyback offer in the United States came in a deal announced on Tuesday by the Justice Department, Federal Trade Commission, Environmental Protection Agency and California state regulators. The proposed consent decree confirmed that VW will set aside $10.033 billion to cover buybacks or fixes for diesel cars and sport utility vehicles that used illegal software to defeat government emissions tests.

VW admitted in September that it installed secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution. VW still may face criminal charges and oversight by an independent monitor, a person briefed on the matter said.

A criminal settlement could include measures to ensure VW would not engage in further cheating.

Shares of VW rose as much as 5 percent on Tuesday, and closed up 1.7 percent at 107.85 euros.

"We didn't follow a multiyear, grind-it-out litigation strategy, which would have been counterproductive for Volkswagen," said Robert Giuffra Jr., VW's lead lawyer. "We moved with lightning speed to settle with our federal and state regulators and the private plaintiffs."

Under the Justice Department deal, VW will provide $2 billion over 10 years to fund programs directed by California and EPA to promote construction of electric vehicle charging infrastructure, development of zero-emission ride-sharing fleets and other efforts to boost sales of cars that do not burn petroleum.

VW also agreed to put up $2.7 billion over three years to enable government and tribal agencies to replace old buses or to fund infrastructure to reduce diesel emissions.   Continued...

A VW sign is seen outside a Volkswagen dealership in London, Britain November 5, 2015.   REUTERS/Suzanne Plunkett/File photo