Volkswagen will offer U.S. owners of vehicles with rigged diesel engines $5,000 apiece, according to a plan the embattled German automaker is reportedly preparing.
The deal, which is expected to cost VW just over $1 billion, could be disclosed as early as tomorrow when the carmaker is expected to appear before a federal judge in San Francisco. But VW is not believed to yet have a plant to fix those diesels, as it was supposed to put together by April 21st, according to reports in both the German newspaper Die Welt and on the Associated Press wire service.
VW is facing more than 500 lawsuits filed on behalf of diesel owners in the wake of revelations it had equipped its vehicles with a so-called “defeat device,” software designed to detect when those cars were undergoing emissions tests and then modify engine operations to reduce levels of smog-causing oxides of nitrogen. Almost 550,000 of those vehicles were sold in the U.S., with 11 million sold worldwide.
The U.S. Environmental Protection Agency charged VW with cheating on emissions tests last September, the automaker subsequently confirming it had rigged both its 2.0-liter and 3.0-liter turbodiesels when it was unable to meet the tough American emissions rules. As TheDetroitBureau.com reports today, the defeat device technology appears to have first been conceived by the Audi subsidiary in 1999, though it wasn’t used until six years later by the VW brand.
(For more on that breaking story, Click Here.)
VW has been forced to pull all of its diesel models off the American market until it can come up with a fix that will meet those clean air rules. And U.S. Judge Charles Breyer had initially ordered the maker to come up with a way to repair vehicles already on the road by March 24th. When VW and the EPA couldn’t agree on a technical solution, Judge Breyer extended the deadline until this week.
But according to both the AP and Die Welt, the two sides have not yet agreed on a repair plan, something that could result in significant fines or a finding that VW is in contempt of court.
(For more on Judge Breyer’s decision to delay VW’s deadline, Click Here.)
It appears VW may be hoping that a significant payout plan would win it more time to come up with a fix. The proposal could also be presented to the court in a bid to settle those consumer lawsuits.
It is unclear if the proposed payout would be handled by victims’ compensation expert Kenneth Feinberg. That attorney previously oversaw payouts to victims of both the 9/11 attack and BP Gulf oil spill, as well as the General Motors ignition switch victims’ compensation fund. He has been appointed to create a similar victims program for VW.
The owner lawsuits have been consolidated before Judge Breyer in his San Francisco courtroom, but VW is also being sued by dealers and investors who contend the scandal has caused them significant financial losses.
And the U.S. Justice Department has initiated its own civil case that could result in as much as $46 billion in penalties.
Additional criminal investigations are underway in the U.S., Germany and elsewhere. While senior VW executives have argued that the cheating was initiated by a “handful” of rogue engineers, German media have reported that dozens of employees have been implicated in an internal probe. Part of the challenge for investigators has been sorting through numerous code words, such as “acoustic software,” that VW insiders used to disguise their efforts.
The German maker has not responded to the reports of a victims’ payout plan. Nor has it yet responded to the report in the German publication Handelsblatt alleging Audi first came up with the defeat device concept. But comments could be forthcoming on Friday when Volkswagen AG holds its previously delayed annual meeting. Supervisors are also expected to release the carmaker’s overdue financial report. At least some of the costs associated with the diesel scandal are expected to have been written off in 2015.
(VW slashing manager bonuses in wake of diesel scandal. For more, Click Here.)