VW Reaches Tentative Agreement To Compensate Dealers For Dirty Diesels

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Volkswagen took another step in putting that whole “Dieselgate” thing behind it Thursday, filing a settlement agreement that would compensate dealers affected by the carmaker’s decision to equip more than 500,000 vehicles equipped with “defeat devices” used to skirt emission standards.

While the financial details of the settlement with 650 U.S dealers weren’t disclosed, sources tell Reuters that it is “significant” and requires VW to repurchase unfixable, used diesel vehicles on dealers’ lots.

VW said in a statement Thursday that it has agreed to make cash payments and provide additional benefits to dealers as part of the settlement.

The terms for the repurchase of the vehicles is the same as VW has agreed to when it comes to buying back vehicles from consumers.

Under those programs, any vehicles bought back by VW are required to be fixed, scrapped, or recycled. The company is prohibited from shipping or moving the vehicles out of the U.S.

The settlement is intended to provide compensation for any economic damage dealers suffered following the September 2015 reveal that the carmaker has equipped hundreds of thousands of vehicles with devices designed to cheat emissions tests.

Shortly after the Environmental Protection Agency and California Air Resources Board revealed that VW’s diesel-engine vehicles contained defeat devices, the carmaker ordered dealers to stop selling affected vehicles until the issue was fixed.

This, VW dealers, claimed in a lawsuit filed in April, “caused great harm to franchise dealers whose profits have been erased and whose dealerships have plummeted in value due to the inability to sell tens of thousands of affected vehicles.”

Details of Thursday’s proposed settlement will be released once it is finalized, VW says, noting it expects that to occur by the end of September.

“We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States,” Hinrich Woebcken, CEO of the North American Region, Volkswagen, said in a statement.

A lawyer representing the VW-branded dealers said the settlement represents the best solution.

“Our clients recognized the best solution would be one that not only allows them to recoup lost franchise value and continue to employ thousands of American workers, but one that also charts a strong course for the recovery of the Volkswagen brand in the United States,” Steve Berman, Managing Partner of the dealers’ counsel Hagens Berman, said in a statement.

In other action Thursday, Judge Charles Breyer of the U.S. District Court, Northern District of California gave VW and federal regulators until October to create a plan to fix 85,000 3.0- liter diesel vehicles. The parties must also come up with a plan to compensate owners of the vehicles, which could include a buy-back offer.

[via Reuters]