Coverage: Volkswagen agrees to pay up to $15.3 billion in claims

German automaker Volkswagen AG has agreed to pay up to $15.3 billion to settle consumer lawsuits and government allegations that it cheated on emissions tests.

Jacob Bogage of The Washington Post has the news:

Calling the deal “unprecedented” and “historic,” Environmental Protection Agency Administrator Gina McCarthy warned car manufacturers her department will continue to investigate companies suspected of breaking the law and levy harsh penalties.

“When you break the laws designed to protect public health in this country, there are serious consequences,” she said at a morning news conference.

“The cost of breaking our consumer and environmental laws is high,” added Edith Ramirez, chair of the Federal Trade Commission.

Volkswagen will a pay a total of $14.7 billion to consumers and federal agencies. Separately, the carmaker will pay $600 million to settle with 44 states, Puerto Rico and the District.

More than $10 billion of the settlement will go to consumers to buy back or repair 475,000 Volkswagens with two-liter diesel engines that were programmed to turn off emission measurement data outside of laboratory settings. Those engines spewed 40 times the legal limit of harmful nitrogen oxides. Consumers will receive between $5,100 and $10,000 in compensation if they choose to fix their cars or between $12,500 and $44,000 if they choose to sell their cars back to Volkswagen.

Jack Ewing and Hiroko Tabuchi of the New York Times report that the final amount paid may be higher:

But the final financial toll — once the company deals with a long list of fines, lawsuits and criminal investigations around the world — may well be far higher. The continuing fallout could leave Volkswagen vulnerable to billions of dollars more in expenses at a time when profit is already under pressure.

So far, Volkswagen has set aside 16.2 billion euros, or about $17.9 billion, for costs related to its public admission last September that its supposed “clean diesel” cars had been deliberately designed to cheat on air-quality tests. Matthias Müller, Volkswagen’s chief executive, said less than two weeks ago that the amount was adequate.

But the American settlement with the government and car owners will consume a big chunk of that money. And Volkswagen faces even more scrutiny in the United States and around the world, most notably as authorities pursue criminal investigations.

The Volkswagen scandal is “one of the most flagrant violations of environmental and consumer laws,” Sally Q. Yates, deputy attorney general of the United States, said at a news conference in Washington on Tuesday.

William Boston of The Wall Street Journal reports that European consumers may miss out on the settlement:

The U.S. settlement has raised concern in Brussels that the much larger number of European customers who bought tainted diesel-powered vehicles from Volkswagen wouldn’t receive equal compensation from the German car maker.
“Volkswagen should voluntarily offer compensation for European car owners that is comparable to what is being paid to U.S. consumers,” said Elzbieta Bienkowska, European Industry and Internal Market Commissioner.

Volkswagen has repeatedly said that it sees no reason to compensate European customers because of differences in U.S. and European law and environmental standards. Under EU rules, the company has said, Volkswagen’s diesel vehicles don’t violate emissions standards.

It has also said that the vehicles containing the illegal software can be more easily repaired in Europe. Volkswagen is recalling nearly three million vehicles in Europe to remove the defeat devices and make the cars compliant with the law.