Volkswagen agreed to a compensation to fix or buy back 500,000 diesel cars in the United States, which have the illegal emissions software.
The settlement, which was announced in San Francisco in federal court, apparently left so many legal and financial issues which arose from the auto manufacturers admission that it had rigged the diesel vehicles thus making them cheat on pollution tests.
The legal teams involved in the case are still negotiating the fines that Volkswagen has to pay, and also the compensation that owners will receive. The sitting judge, Judge Charles R. Breyer put a deadline day for Volkswagen to settle all questions with the federal government and vehicle owner’s lawyers. The deadline date was set for June 21.
The money that Volkswagen pit aside for the damages will clearly have to be increased after such a settlement. The amount is predicted to run into billions of dollars. Volkswagen put aside €6.7 billion against the eventual global costs from the scandal.
If they agree to buy back the cars, the costs will be higher than the current provisions
Said Matthias Hellstern, managing director for corporate finance at Moody’s Investors Service in Frankfurt.
The troubled carmaker faces a potential $18 billion fine from the government in the United States. Legal experts, however, expect the price to be lower though it will stay in the billions. Judge Breyer also mentioned a substantial compensation for owners to be received.
The Justice Department is also investigating whether to press criminal charges or not against the company.
The agreement reached, shows the company trying to reduce the damage they caused environment wise by making investing in clean technology, though there is no clarity as to what kind of investment they would be.
In a statement, Volkswagen said it,
intends to compensate its customers fully and to remediate any impact on the environment from excess diesel emissions.
The court ruling clears a cloud of uncertainty over Volkswagen’s finances and can be seen as a way to restore goodwill between the company and the 480,000 Volkswagen users and Audi A3 model who feel betrayed.