Volkswagen, dealers reach tentative deal in cheating scandal

Volkswagen reached a tentative settlement with a lawyer representing U.S. Volkswagen dealers in a San Francisco court hearing today, reports Reuters. Volkswagen said in a separate statement that it agreed to make cash payments and provide additional benefits to the dealers to resolve their claims.

In July, VW had said it was "regrettable that some states have decided to sue for environmental claims now".

U.S. dealers have yet to begin collecting the 400,000-plus 2.0-liter TDI diesel vehicles VW has agreed to buy back, pending the final ratification of the agreement announced at the end of June. VW eventually agreed to buy back 475,000 cars from owners at a cost of $10.3 billion. Sources told several media outlets it comes to to $1.2 billion. VW subsequently acknowledged the subterfuge. The deal would require the judge's approval.

The agreement in principle must still be approved by the court.

The beleaguered German automaker said the amount of the payments will not be determined until details of the agreement are finalized in September.

The dealers sued Volkswagen, alleging fraud and false advertising.

In 2015, the Volkswagen brand sold nearly 350,000 cars in the United States, down from 438,134 in 2012.

The fiasco appears to have had a broader impact on VW brand sales this year.

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Financial provisions related to legal implications of the scandal caused Volkswagen to record a 2105 net loss, its first in more than 20 years.

Volkswagen is promising U.S. dealers a wider model range and lower pricing as the automaker tries to broaden its appeal and push the reset button in the world's second-biggest car market in the wake of record fines and plunging sales. "Not only do they represent the company to the owners, they're also impacted financially since they're hamstrung on what products they can sell".

VW dealers were "blindsided" by the emissions scandal, Steve Berman, managing partner at Hagens Berman, said in a statement.

Lawyers for the company and the government who were in the courtroom Thursday told Breyer that they were still working on how to fix or otherwise resolve the status of about 80,000 Volkswagen Audi and Porsche models with 3.0-litre diesel engines that were equipped with emissions-cheating software.

Plaintiffs filed the initial complaint against Volkswagen on 6 April, 2016, in the US district court for the Northern District of Illinois. This fix, he said, will bring the cars in compliance with emissions laws in place. Bosch, a defendant in some of those lawsuits, isn't part of VW's U.S. settlement.

Volkswagen previously reached an agreement with US attorneys for car owners.

Not that long ago, Volkswagen dealerships were among the hottest properties in the retail auto business.

  • Michael Mitchell