Volkswagen unveiled a broad plan to help U.S. owners of nearly 500,000 emissions-cheating diesel cars as the company tries to resolve one of the worst scandals in automotive history.
But it’s still unknown exactly what help customers will get.
U.S. District Judge Charles Breyer in San Francisco said Thursday that the plan proposed by Volkswagen and regulators would include Volkswagen buying back the cars, canceling leases or fixing the cars to meet emissions standards.
There also would be “substantial compensation” for the car owners, Breyer said at a hearing.
The plan’s specifics are still being ironed out; Breyer gave Volkswagen until June 21 to reveal them. And the proposal applies only to the 2.0-liter diesel vehicles involved in the case — including certain Jetta, Golf, Beetle and Passat models — which make up the bulk of the rigged cars.
“It is a fairly sketchy framework at this point,” Autotrader.com senior analyst Michelle Krebs said.
The cars’ owners “will have to carefully weigh all of their options, which include having Volkswagen buy back their cars, have them repaired if that is possible or return their lease cars,” she said.
Breyer said at the hearing, “There is nothing for the consumer or their counsel to do until they receive the actual formal notice” of their options.
Volkswagen also must deal with an additional 90,000 3-liter vehicles equipped with the faulty emissions systems. Negotiations continue about fixing those cars or compensating their owners.
The automaker also “will be required to commit other funds to promote green automotive technology,” Breyer said.
Breyer had given Volkswagen until Thursday to reach an agreement with the U.S. Environmental Protection Agency and the California Air Resources Board or face the prospect of a trial in his court his summer.
Breyer is presiding over hundreds of class-action lawsuits filed against Volkswagen, which also faces possible fines and penalties levied by the EPA, CARB and other regulators. Those penalties, together with the proposed repairs and compensation for car owners, could cost Volkswagen billions of dollars.
Volkswagen issued a statement saying that “these agreements in principle are an important step on the road to making things right.”
“As noted today in court, customers in the United States do not need to take any action at this time,” Volkswagen said, adding that it is “committed to earning back the trust of its customers, dealers, regulators and the American public.”
The EPA was represented in court by the Justice Department, which later said the agreement “addresses one important aspect of the department’s pending case against VW, namely what to do about the 2-liter diesel cars on the road and the environmental consequences resulting from their excess emissions.”
CARB declined to comment.
Some of the affected Volkswagen owners are growing increasingly frustrated at not yet knowing their options.
“I want VW to buy this car back from me for what I paid for it,” said Frank Quinn, 50, an office-equipment salesperson who bought a 2014 diesel VW Passat two years ago for $36,000. Quinn said he drives the car 100 miles each workday from Stevenson Ranch to downtown Los Angeles.
The VW scandal erupted in September when Volkswagen admitted that it had installed so-called cheat devices on diesel-powered cars from 2009 through 2015.
The devices allowed the vehicles’ engines to emit fewer pollutants during emissions tests than they would during normal road use. On the road they emit up to 40 times the permissible levels of nitrogen oxides, or Nox — a key element of smog.
The scandal involved nearly 600,000 cars overall in the United States, including about 70,000 in California, and 11 million Volkswagen vehicles worldwide.
Volkswagen suffered immediate fallout from the scandal as its U.S. sales fell sharply, and the company’s top U.S. manager, Michael Horn, abruptly left the automaker last month.
Some environmental groups noted the lack of details in Thursday’s proposal and demanded that Volkswagen thoroughly resolve the issue.
“The final settlement needs to fix or remove all of the polluting cars still on the road, make whole the consumers who trusted the vehicles were lower polluting and compensate for the pollution the faulty cars created,” the Sierra Club said in a statement.
Fixing the cars’ emissions-cheating system is not as simple as removing a single part or recoding a car’s computer software, some analysts have noted.
The systems have multiple, interdependent parts involving software and hardware, and some of them probably would have to be replaced by VW dealers, adding to Volkswagen’s costs.
It’s also unclear whether all of the cars’ owners, knowing that the repairs probably would reduce the cars’ fuel economy and performance, would bring the cars in to get fixed without some compensation or incentive, analysts said.
In the meantime, the proposed settlement appeared to include “all of the elements that a deal should include, but the devil will be in the details,” said Emily Rusch, executive director of the public-advocacy CalPIRG Education Fund.