Should VW Owners Celebrate the ‘Dieselgate’ Settlement?

Volkswagen logo

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Sometimes, things need to get worse before they get better, and for Volkswagen, things just keep getting worse. This week, it came out that the software the automaker used to fool emissions testers on its diesel cars was developed by Audi as early as 1999. And since it failed to meet its March deadline to come up with a fix for the emissions-cheating cars, it faced a court date in San Francisco this week unless it reached a settlement with the federal government.

Now, a settlement has been reached, and it may mean good news for owners affected by the scandal and not so good news for the company. In a deal reached between the automaker and the U.S. Department of Justice, Volkswagen may buy back as many as 482,000 “dirty diesel” cars in America alone. As many as 11 million cars are affected worldwide.

Volkswagen

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The company issued a terse statement regarding the preliminary deal yesterday. “Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the American public,” it said. “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 plant

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Of course, the plan won’t be cheap, and it only affects cars with the 2.0-liter TDI engine, not the larger 3.0-liter diesel found in various Volkswagen, Porsche, and Audi models. Preliminary reports have the company paying TDI owners $5,000 in compensation, and giving them up to two years to decide what to do with their cars. Owners have the option of a buyback, a modification to their leases allowing them to leave early, or to have their cars fixed and brought up to standards. The plan is expected to cost the company upwards of $7 billion.

This is also the tip of the iceberg, and while the company will pay dearly for the buybacks, it’s by no means off the hook. The Department of Justice’s criminal investigation remains ongoing, as are investigations by multiple states. And despite the potential windfall, there is little evidence to suggest the plan will satisfy any of the 600 class-action lawsuits filed by customers against the company. And that’s in the U.S. alone — the company has just $7.6 billion set aside to handle the crisis worldwide, and a German court has just ordered a recall of an additional 630,000 diesel-powered vehicles. While Opel and Mercedes-Benz were named in the German recall (though these brands have not been found to have any emissions-cheating software), the majority of affected models were built by Volkswagen Auto Group.

Volkswagen TDI

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While this is a major break in the Dieselgate case, it’s by no means the end, or even the beginning of the end. It’s likely the first glimpse of a very long, arduous road that the beleaguered company will need to take if it wants to rebuild its image — or even survive — in the U.S. market. This is one of the strangest scandals the automotive industry has ever seen. Who knows where it will take us next.

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