E-Paper
VW smoking peace pipe, but still faces trial by fire
NEW YORK: The warring parties in Volkswagen’s emissions cheating scandal are preparing to offer a peace proposal this week, but the German automaker’s travails are
NEW YORK: The warring parties in Volkswagen’s emissions cheating scandal are preparing to offer a peace proposal this week, but the German automaker’s travails are far from over.
Taking shape after months of negotiations is a broad settlement agreement, expected to exceed $10 billion, involving Volkswagen, the US federal government and half-a-million car owners. The provisions are expected to offer those owners some financial compensation in addition to fixing or buying back their vehicles.
The deal, to be announced Tuesday in the case overseen by US district judge Charles R Breyer, is also expected to require Volkswagen to pay penalties.
All told, the civil settlement is set to be the largest in automotive history, dwarfing the $1.4 billion Toyota paid to settle a class-action lawsuit over flawed accelerators and the more than $2 billion General Motors has paid so far to settle claims from owners of cars with faulty ignition switches.
Even if Breyer accepts the Volkswagen deal, the company will have many unsettled issues, with unknown costs, in the United States and abroad.
“It’s clear Volkswagen desperately needed to put this horrible situation in the rearview mirror; they’ve negotiated this settlement with breathtaking speed,” said David M Uhlmann, a former chief of the Justice Department’s Environmental Crimes Section, who is now a law professor at the University of Michigan.
The deal, moreover, would not end the Justice Department’s criminal investigation into the company, which could lead to additional fines. Nor would it resolve investigations by attorneys general in more than 40 states and the District of Columbia. The issues that Tuesday’s settlement proposal is not expected to cover include how Volkswagen will repair its cars, and terms for the owners of 85,000 Volkswagen and Porsche cars sold in the US that had a different type of diesel engine but also had emissions problems.
Some car owners may choose not to participate in the group settlement, and instead pursue separate claims in the hope of getting even better terms. They however also risk getting a lesser settlement or none at all if their separate lawsuits are unsuccessful.
Bruce Clark, associate professor of marketing at the D’Amore-McKim School of Business at Northeastern University, predicted a tough battle for Volkswagen to win back consumer confidence.
“Volkswagen made such a big and public bet on diesel, and it turns out they were lying to us,” Clark said. “The average consumer is going to say: ‘Why should we believe them again?’”
The New York Times
