Volkswagen got approval from the EPA and CARB to implement its proposed fix for its faulty diesel engines.

Christmas came in July for Volkswagen as it seemingly unwrapped good news about diesel modifications in the U.S. as well as its earnings and sales as if they were presents under the tree.

“Volkswagen is pleased that it has received regulatory approval to offer affected customers in the United States an approved emissions modification (AEM) for approximately 326,000 Generation One 2.0-liter TDI vehicles with automatic and manual transmissions,” the company announced today.

The Environmental Protection Agency and the California Air Resources Board approved an emissions modification proposed by VW that will reduce nitrogen oxides emissions from model year 2009–14 diesel Jetta, Golf, Beetle and Audi A3 vehicles.

“This important milestone means that an approved emissions modification is now available for more than 98% of eligible 2.0-liter TDI vehicles in the United States. Eligible customers will be notified that they can receive a modification free of charge at their preferred dealership if they want to keep their vehicles.”

(German authorities investigating collusion among automakers. Click Here for the story.)

With the approval, the automaker can offer owners an option: fix the car or sell it back to VW. According to VW, it submitted test data and technical information showing the modification works without negatively affecting vehicle reliability or durability.

As part of the deal, Volkswagen is required to explain how and why the modification works and what difference owners may experience in their car’s performance, reliability and durability as a result so they can decide to fix or sell.

Additionally, VW reported better-than-expected quarterly earnings and revealed it would be raising its full-year sales forecast.

(Click Here for more about a former VW executive pleading guilty in emissions scandal.)

“The Volkswagen Group expects that deliveries to customers will moderately exceed the prior-year volume amid persistently challenging market conditions,” the company said in a statement. “We anticipate particular challenges resulting from the economic situation, intense competition in the market, exchange rate volatility and the diesel issue.”

The company reported earnings before interest and tax jumped to $5.34 billion, which was three-fold increase over last year’s second quarter and slightly higher than what analysts predicted for the quarter.

Europe’s largest automaker said it now expected revenue to beat last year’s record $254 billion by more than 4%, compared with up to 4% previously, Reuters reported.

(VW declares the “future is electric.” Click Here for the story.)

Another positive sign for VW is fact that the company did not announce any further provisions related to its cheating of U.S. diesel emissions tests. The group has to date set aside 22.6 billion euros to cover fines, compensation and vehicle refits, Reuters noted.

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