CARS.COM — The Volkswagen Group has reached a settlement with U.S. and California regulators as well as the Federal Trade Commission for as much as $14.7 billion to settle an emissions scandal that affects hundreds of thousands of diesel cars from as far back as the 2009 model year. Under the settlement, VW will offer to repurchase affected diesel vehicles from their owners or terminate leases for nearly 500,000 model-year 2009-2015 cars in the U.S. with 2.0-liter diesel (TDI) engines; it will also spend nearly $5 billion to mitigate pollution and invest in environmental technology.
Related: VW Diesel Crisis: Timeline of Events
Today's settlement allows owners of affected VWs to cancel their leases at no cost or resell their vehicles back to Volkswagen. Owners who elect to sell their cars back to VW will receive the retail value just before Volkswagen's September 2015 disclosure of the emissions crisis, the EPA said. Those values range from $12,500 to $44,000 depending on the specific car, its condition and where it was purchased. VW must also offer to forgive any loans for owners who owe more on their cars than the pre-September values. If they have third-party loans — through banks or credit unions — VW will pay up to 130 percent of the buyback values.
VW also can propose a plan to fix the vehicles to regulators that, if approved, gives owners the option to have their cars modified to reduce emissions, in which case they can keep their cars as well as receive "money from Volkswagen to redress the harm caused by VW's deceptive advertising," according to the EPA. The automaker has proposed such a fix in the past, but authorities rejected it in January on the grounds that it was too vague. The EPA says lessees and consumers who have already sold their diesel vehicles will also receive payments, though some of them may be partial.
In any case, Volkswagen must compel at least 85 percent of four-cylinder diesel owners to give their cars back or face additional fines.
"Consumers who were cheated by Volkswagen's deceptive advertising campaign will be able to get full and fair compensation, not only for the lost or diminished value of their car but also for the other harms that VW caused them," FTC Chairwoman Edith Ramirez said in a statement.
The settlements "partially resolve" allegations by the EPA and California regulators that Volkswagen used "defeat devices" in its diesel vehicles to thwart emissions tests, the EPA said. They also resolve claims by the FTC that VW aired deceptive ads for its clean-diesel cars. However, today's settlement does not resolve pending civil claims and criminal liabilities against Volkswagen, the EPA noted.
The settlement comes hours before a court-ordered filing deadline for regulators and plaintiff groups to give more specifics on an initial buyback agreement announced April 21.
As expected, today's developments affect only the four-cylinder diesel vehicles. It does not include some 80,000 V-6 diesel vehicles that are also part of the scandal.
We'll report more as we find out specifics, so stay tuned.
Editor's note: This story was updated to reflect that Volkswagen will pay $5 billion to offset pollution and invest in green-car technology.
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