VW has agreed to a £808.5 million settlement in relation to the 3.0 litre diesels in the U.S.

As frustration mounts in the U.K. over VW’s continued refusal to pay compensation to victims on this side of the pond, the VW Group has come to yet another settlement in the U.S. Once again, it’s a settlement of monumental proportions.

This time it’s for the remaining 80,000 3.0 diesel vehicles that were suspected of using the so-called “defeat device” to cheat emissions, and, as you’d expect, the figures are massive.

Settlement for 3.0 litre vehicles

The settlement was agreed on the 21 December 2016 after District Judge Breyer extended the deadline for the final time. Although the settlement has been agreed at £808.5 million, the Environmental Protection Agency (EPA) has reminded the German automakers that it doesn’t cover compensation for the affected vehicle owners.

Final details of the settlement are being agreed upon by multiple parties including VW, the EPA, the California Air Resources Board (CARB), and the U.S. Justice Department.

An EPA Administrator, Cynthia Giles, estimates that the £808.5 million settlement will cover the costs of repurchasing and fixing the diesel vehicles sold in the U.S. £182 million of the settlement will be allocated into a trust fund to offset excess diesel emissions. The VW Group has also agreed to pay California £20 million. There has yet to be a fixed sum for compensating vehicle owners; however, the federal judge said that they’ve reached a “substantial agreement”.

Buy backs

The German automakers could buy back less vehicles, consequently costing them less. This is because VW has told the U.S. government that they believe 60,000 of the 3.0 litre diesel vehicles can be fixed to comply with the federal emissions limit. If this method works, VW may not have to buy back as many of the diesel vehicles as initially thought. This could be very beneficial to VW as many are categorised as expensive and luxury vehicles, fitted with 3.0 litre V6 TDI engines.

After a ‘technical review’, an EPA spokesperson, Nick Conger, said that it was:

“very possible that the newer vehicles can be fixed to comply with the emission standards.”

Music to VW’s ears, I’m sure.

Reason for the £808.5 million settlement

The settlement isn’t just about compensating affected vehicle owners; it’s also about the environment given that the U.S. has much stricter pollution laws when compared to many other countries. Ms Giles notes that the settlement is an attempt to rectify the damage that VW has caused, saying: “this settlement is about taking pollution out of the air we breathe”.

According to a study published last year in the journal Environmental Research Letters, VW’s emissions may have caused many premature deaths. The study specifically looked at the number of deaths caused by VW’s emissions between the period of 2008 and 2015.

VW’s growing costs

The actions of the German automakers have cost them billions of pounds, and has left them with somewhat of a tainted reputation, in what has become one of the largest consumer group actions in several countries.

The current settlement in the U.S. addresses vehicles including VW, Audi and Porsche, that weren’t included in the £12.2 billion settlement for 475,000 2.0 litre diesel vehicles.

Back in September 2015, VW admitted to covertly installing software (the so-called “defeat device”) to enable their vehicles to pass emissions tests. The software allowed the vehicles to look much greener and cleaner (as advertised by VW), while in actual fact the dirty diesels were polluting up to 40 times more than the regulated limit of NOx in the real world.