A U.S. federal judge has approved the largest settlement by an automaker in U.S. history. U.S. District Judge Charles Breyer, who oversaw the litigation against Volkswagen, approved the USD14.7 billion settlement that was proposed back in July, calling the deal “fair, reasonable and adequate.”
The deal would give about 475,000 owners of Volkswagens and Audis with 2-litre diesel engines the opportunity to have their cars bought back or modified by Volkswagen, as well as seek additional cash compensation.
The settlement “is an important milestone in our journey to make things right in the United States,” Hinrich Woebcken, chief executive of Volkswagen Group of America Inc., said in a statement.
The German automaker had admitted to violating the U.S. Clean Air Act and cheating during emissions testing by installing “defeat devices” into a number of their diesel vehicles from 2009 to 2015, which involved nearly 600,000 cars in the U.S.A. and 11 million vehicles worldwide.
A defeat device is anything that “bypass, defeat or render inoperative elements of the vehicles’ emissions control systems.” The software that was integrated into their auxiliary emissions control device (AECD) detected when the car was undergoing emissions testing to maximise test results.
Volkswagen said it would start to implement the U.S. settlement immediately.
Volkswagen also will pay USD2.7 billion into a trust to support environmental programs and reduce emissions, as well as spend USD2 billion over a 10-year period to invest in and promote zero-emissions vehicles.
Volkswagen announced Thursday that it has set aside another EUR442 million (USD482.1 million) to cover the costs of the diesel emissions scandal. The Volkswagen Group reported revenues of EUR52 billion (USD56.7 billion) in the third quarter, compared with a loss of EUR2.5 billion (USD2.7 billion) during the same period a year ago. Audi and Porsche, the group’s premium and luxury brands, both recorded strong sales growth in the third quarter, offsetting weak performance of the core VW brand.