The Latest on the VW Payout

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Volkswagen has reached an “agreement in principle” to compensate its 650 U.S. retailers for damages sustained by their businesses in the wake of the automaker’s diesel emissions scandal.

The deal would be worth more than $1.2 billion, Reuters reported, citing two sources briefed on the matter.geldscheisser

Under the terms of the preliminary pact, dealers will receive a cash payout from a settlement fund within 18 months, according to a statement from Hagens Berman, a law firm representing VW dealers involved in litigation overseen by U.S. District Judge Charles Breyer in San Francisco. In addition, VW has agreed to repurchase “unfixable, used” diesel vehicles from dealer inventory under the same terms as buyback offers for consumers, Hagens Berman said.

Dealer payouts will be determined by a formula that is being finalized and will be announced in the coming weeks, according to the law firm. A particular dealer’s payout will vary based on the size of the dealership and its market, “among other factors.”

A VW spokeswoman confirmed those aspects of the deal, but declined to elaborate further, citing an agreement to maintain confidentiality amid negotiations to finalize the pact.

The deal is subject to court approval by Breyer and many details are still being negotiated, VW and Hagens Berman said. A final settlement proposal must be submitted for court approval by Sept. 30.

In a statement, VW North America CEO Hinrich Woebcken called the preliminary agreement a “very important step in our commitment to making things right for all our stakeholders in the United States.”

“This agreement, when finalized, will strengthen the foundation for our future together and further emphasize our commitment both to our partners and the U.S. market,” Woebcken said.

Dealers ‘blindsided’

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

Many VW dealers have called for compensation as the value of their VW franchises has plummeted along with sales and showroom traffic since the company admitted last September to rigging some 11 million diesel vehicles worldwide with illegal software to fool emissions tests, including more than 500,000 in the U.S.

During a court hearing in San Francisco today, Berman said, “we’re pleased that the settlement will address the financial harm that they’ve incurred.”

Berman represents VW dealer Ed Napleton, who sued the factory last April in U.S. District Court for the Northern District of Illinois. The suit was later transferred to the VW litigation overseen by Judge Breyer in San Francisco.

Meanwhile, a group of six dealers have been pressing the factory for a compensation deal for months. The Dealer Investment Committee formed in late March, on the sidelines of the National Automobile Dealers Association convention in Las Vegas. At the time, some retailers were considering lawsuits against VW for damages, according to lawyers, and at least one potential class action was drafted and waiting to be filed. For some dealers determined to keep relations amicable, the formation of the committee represented a way to pursue financial relief without a court fight.

But nearly six weeks passed without any clear signs of progress, prompting frustration and disappointment among some dealers. Volkswagen agreed to begin talks in May.

‘Team effort’

Alan Brown, chairman of VW’s dealer council and one of the Dealer Investment Committee members, praised the “amazing team effort” of VW, attorneys and dealers that produced the preliminary pact.

“It’s been a lot of hours and lot of work and I believe that the dealers are going to be really pleased with the package that’s coming their way,” Brown toldAutomotive News. “I feel very confident that this will satisfy every dealer, and I believe every dealer will accept it.”

Under proposed deal, VW will agree to treat its dealers as a class of plaintiffs in order to facilitate the settlement. In its statement, VW said the deal intends to resolve “alleged past, current and future claims of losses in franchise value.”

Last month, Breyer approved a separate $15 billion VW settlement with consumers and government agencies under which Volkswagen will pay cash compensation to owners of its 2.0-liter diesel vehicles, buy back vehicles equipped with illegal software and fund environmental programs.

Breyer, meanwhile, ordered Volkswagen and federal regulators to start settlement talks to resolve the fate of 85,000 3.0-liter diesel vehicles that could include a buy-back offer for those Porsche, Audi and Volkswagen vehicles.

Buying the expensive larger cars and SUVs sold since 2009 could cost VW billions of dollars.

Breyer set a Nov. 3 hearing for an update on the status of the talks and emphasized the urgency of resolving the issue. He said he wanted to ensure “a strong sense of reality” in finding a solution.

VW must submit by late October its specific plans to fix the 3.0-liter vehicles, which it said include a mix of software upgrades and emissions equipment modifications.

 

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7 COMMENTS

  1. “Last month, Breyer approved a separate $15 billion VW settlement with consumers and government agencies under which Volkswagen will pay cash compensation to owners of its 2.0-liter diesel vehicles, buy back vehicles equipped with illegal software and fund environmental programs.”

    Depending on how the govt. decides to screw car owners I can see how they’ve been dealt a financial blow but how the hell do you hurt a govt. agency? It’s like the War on Some Drugs where the “victim” is the “state”. Oh yes, the state is quite the pussy when it comes to getting “hurt”.

    • You have offended its feelings by not adhering strictly to its diktats, which of course are solely for ‘the common good,’ esp. the chiiiiiiiilllllldren.

      • Oh yes PtB and I live it every day. Got in a little trouble down at the county seat. They put me in the jailhouse for walking on their street. When the judge read the verdict “You’re a guilty man”, it’s 80,000 dollars or 10 years in the can. He said that’ll be cash on the barrel head son. You can take your choice if you’re 21. No money down, no credit plan, no time to chase you cause I’m a busy man. And my thanks go out to Charlie and Ira for those altered lyrics.

        If I could afford it I’d get a tattoo on my forehead……Cash on the Barrel Head.

          • PtB, I suspect of us older people, few know the hard knocks the young have had already. If I hadn’t worked with a lot of young and not so young people for the last 10 years or so I probably wouldn’t have a clue.

            But getting run through the Just Us system, and often, more than once or twice, is something the young have simply come to take in stride. About the only people i’ve worked with that are 20 years younger or more have seen more time in the can than I have.

            It’s taken its toll too. You find them with all sorts of maladies and most of them originated in the “system”. Being locked up these days is more like the old times when getting thrown in jail is almost a guaranteed lifelong disease of some sort for those that survive. Our society really sucks and the young know it better than anyone.

    • You hurt it the same way you hurt any other cancer.
      Kill one cell at a time.
      Poisons work.
      Radiation works.
      Lead is a poison…
      And just because he’s your neighbor doesn’t mean you don’t hunt near home.

      After all, no motive anyway…

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