The check is in the mail. Well, not quite. But Kenneth Feinberg, the specialist whom Volkswagen has hired to put together a compensation package for U.S. owners of about 600,000 diesel-powered vehicles, says he expects to be eventually making some very generous payments.
But the timing is up in the air, Feinberg tells the German newspaper the Frankfurter Allgemeine, until VW can first come to an agreement to move forward with repairs for those vehicles – which were equipped with so-called “defeat devices” meant to cheat on diesel emissions tests.
“My hands are tied as long as VW and the authorities have not overcome their differences,” Feinberg says.
The crisis was set in motion last September when the U.S. Environmental Protection Agency revealed that VW had used hidden software capable of detecting when one of its 2.0-liter turbodiesel vehicles was being subject to emissions tests. Otherwise, the vehicles would far exceed American nitrous oxide standards. VW quickly confirmed the so-called defeat device was used in about 500,000 vehicles sold in the U.S., and then reported cheating with its 3.0-liter diesel models, as well.
(VW delays annual shareholders’ meeting, 2015 earnings reports. Click Here to learn why.)
The German carmaker also revealed it had installed the software in a total of about 11 million diesel models sold worldwide. It began fixing products sold outside the U.S. in January, but its first proposed fix for vehicles sold in the States was rejected by the EPA last month. Another proposal was submitted to the agency last week by VW’s luxury subsidiary Audi.
Separately, the maker last month hired compensation specialist Ken Feinberg to set up a program to recompense U.S. owners impacted by the crisis. Feinberg recently wrapped up a similar program set up by General Motors for victims of its ignition switch crashes. Feinberg also handled compensation programs for the 9/11 terrorist attacks and BP’s Gulf of Mexico oil spill.
He has not yet said how he planned to handle the Volkswagen fund but indicated that the automaker had granted him complete autonomy in determining how much owners should receive in compensation.
(Diesel cheating an “open secret” at VW…or was it? Click Here for the story.)
VW is expected to give those owners the choice of accepting a settlement or going to court. More than 450 lawsuits have so far been filed against the automaker by diesel owners, an inter-judicial panel recently deciding to have those cases consolidated before a federal court in San Francisco.
Among the various claims that are being made, many owners contend the scandal has resulted in lower trade-in values for their turbodiesel vehicles.
Feinberg tells the Frankfurt newspaper he expects he will offer enough to satisfy most potential victims. “Look at my prior cases: 97 percent of the victims of Sept. 11 accepted my offer. At GM and BP it was more than 90 percent, too. That has to be my target for VW.”
The compensation expert notes that the VW case does not involve physical injuries or the loss of a family member, as happened when GM delayed by a decade acting to repair faulty ignition switches. Nonetheless, he says that owners who want “to be treated fairly,” are being “quite reasonable.”
As to claims that the diesel emissions harmed an owners health, Feinberg says, “I am inclined to not accept that and tell such people they should sue Volkswagen if they want to.”
The German maker – which ended 2015 as the world’s second-largest car manufacturer by unit volume – has already promised U.S. owners of the affected diesels compensation packages worth $1,000. It has not made a similar offer elsewhere, but officials with the European Union are pushing Volkswagen to make a similar move there.
(VW appoints new head of North American operations. Click Here for the story.)
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