Volkswagen has reached an agreement in one of the largest class-action settlements the United States has ever seen. The hefty $14.7 billion sum is the result of the manufacturer settling with customers affected by its diesel emissions cheating scandal — which proved Volkswagen deliberately equipped roughly 475,000 diesel cars with software that bluffed emissions regulations for years, and caused nearly 1 million tons of extra pollution.
The estimated $14.7 billion will be used to buy back vehicles from owners (at pre-scandal value), provide compensation to consumers who choose to have their faulty vehicles fixed, and provide additional funding to environmental cleanup and promotion of zero-emission vehicles.
The 475,000 2-liter diesel vehicles that are affected are the Jetta (2009–2015), Beetle (2012–2015), Passat (2012–2013), Audi A3 (2010–2015), Jetta SportWagen (2009–2014), Golf (2010–2015), Golf SportWagen (2015), and Touareg (2009–2016).
Volkswagen has an additional 600,000 faulty 3-liter-engine vehicles that have not yet been agreed upon in a settlement. Those cars include the Audi A6 Quattro (2014–2016), Audi A7 Quattro (2014–2016), Audi A8 and A8L (2014–2016), Audi Q5 (2014–2016), Audi Q7(2009–2016), and the Porsche Cayenne (2013–2016).
The settlement is still pending, which means the judge who presided over the class action lawsuit must sign off on the settlement agreement. According to Volkswagen, the approval will happen in the fall of 2016 at the earliest. Additionally, VW still faces possible criminal charges as well as federal penalties for violating the Clean Air Act, so its time in court isn’t over.
When all settlements are approved, notices will be mailed out to all impacted owners and lessees with finalized terms. After that, customers will have until 2018 to decide how they want to be compensated.
“The good thing about a settlement is that it gives owners options,” says Rebecca Lindland, senior director of commercial insight at Kelly Blue Book. “When you accept the settlement, generally you are opting into the class action suit, allowing multidivisional litigation to negotiate on your behalf, and writing off any individual claim. So when you choose your settlement option, you need to choose what’s best for you and your individual circumstance.”
For owners who choose to sell their vehicle back to Volkswagen, the automaker will repurchase each car at a price between $12,500 and $44,000, depending on the value of the car at the time of purchase. This may be a good option for consumers who are ready to move on from Volkswagen. “If you aren’t using your diesel vehicle for its maximum qualities, then trading the car in might be the right option,” Lindland says. “Electric cars have similar torque properties and other manufacturers make diesel vehicles.” If you are looking for an electric car that can get up and go at a red light, Lindland suggests opting for a 2017 Chevy Volt, or Tesla Model S, Model X, or Model 3. If you are hooked on having another diesel, Mercedes, BMW, Land Rover, and Jeep all have diesel models.
Then there is the option to have your Volkswagen repaired. For those who choose this route, Volkswagen’s proposed compensation will allow each consumer to receive a cash payment between $5,100 and $10,000 for the lost value of the cars. “Often car owners choose the cars they buy for a specific purpose, and owners don’t want to compromise after making that choice,” Lindland says. “The performance of diesel cars’ extended gas mileage, quick pickup, and great torque makes it an appropriate car in so many situations — so I wouldn’t be surprised if most Volkswagen owners go for the repair.” Lindland says that no other cars on the U.S. market offer the same high-efficiency performance of the Volkswagen diesel, so if you’re a daily commuter or someone who drives often, keeping the car for its performance power might be best. However, take note the repair will most likely cost owners marginal measures in fuel economy and power. Affected consumers can also choose to not sell their car back to Volkswagen or take the repair with compensation deal.
For access to exclusive gear videos, celebrity interviews, and more, subscribe on YouTube!