Last week, it was announced Volkswagen must pony up a whopping $14.7 billion to settle claims stemming from last year’s Dieselgate scandal. The settlement applies to nearly a half million U.S. passenger vehicles equipped with “defeat devices” that enable “cheating” in emissions tests (for an overview of Dieselgate, click here). Included in the settlement are options for vehicle buybacks, lease termination, and equipment modification, plus hefty cash restitution (between $5,100 and $10,000). We’ve put together a comprehensive synopsis of the settlement proposal, including how to get paid if you own or lease an affected car.
The settlement covers 2009 to 2015 model year Volkswagen and Audi vehicles, including: 2013 – 2015 VW Beetle, 2010 – 2015 VW Golf, 2009 – 2015 VW Jetta, 2012 – 2015 VW Passat, 2010 – 2013 Audi A3, and 2015 Audi A3. It’s the largest auto-related class-action settlement in history, affecting roughly 15 percent of all new VW and Audi models sold in the U.S. during the relevant six-year timespan (475,000 of 3,099,678 total units sold, source: Wikipedia).
To make matters worse for VW, the settlement only applies to models equipped with a 2.0-liter diesel engine. The 80,000 or so vehicles equipped with a cheating 3.0-liter engine will be settled separately.
At the moment, the settlement proposal is still pending, with a preliminary approval court hearing scheduled for July 26. However, it looks more than likely the plan will go through, in which case notices will be mailed to inform owners and lessees of the settlement terms.
Read on for a breakdown of who is entitled to compensation, the options on the table, how much money you might get, and how to get it.
Continue reading to learn more about the massive VW settlement.
Who Is Entitled To Compensation?
Basically, if you live in the U.S., and you owned or leased one of the affected VW or Audi diesel models on September 18, 2015 (the day Dieselgate went public), then you’re entitled to compensation. Current owners and lessees are also included. Owners and lessees outside the U.S. are not included in this particular settlement.
If you’re unsure if your vehicle is affected, check out the VW Court Settlement website here and click “Vehicle Look-Up.” Assuming the proposal receives its preliminary court approval on July 26, you’ll be able to enter your vehicle’s VIN to determine whether or not it’s included in the settlement.
There are three categories of Class Members (folks getting paid) included in the settlement: Eligible Owners, Eligible Lessees, and Eligible Sellers. I outline these below and list which options are offered to each (see the “The Options” section for more information).
Alternatively, customers may also choose to sue VW independently.
Eligible Owners
Most folks entitled to compensation are Eligible Owners, that is, someone who bought an affected car on or before September 18, 2015, and still has that car in their possession. Anyone who owns an affected car bought after September 18, 2015, is also considered an Eligible Owner, but receives half the restitution payment as an owner who purchased the car on or before September 18, 2015.
Options – 1) Buyback, 3) Equipment Fix
Eligible Lessees
This category includes individuals who currently lease their car with VW Credit, Inc., as well as lessees who returned their car at the end of the lease on or after September 18, 2015. Customers who leased their car, then purchased it after June 28, 2016, are also included. Former lessees receive the same restitution payment as current lessees.
Options – 2) Lease Termination, 3) Equipment Fix
Eligible Sellers
This category includes individuals who owned an affected car, but sold it between September 18, 2015, and June 28, 2016. Individuals who sold their vehicle after last week’s settlement announcement are no longer eligible for any compensation.
Options – 1) Buyback (half of restitution payment)
The Options
Out of the nearly $15 billion slated for the settlement, $2.7 billion will go towards the remediation of “excess nitrogen oxide emissions” equal to or greater than those caused by vehicles included in the lawsuit. Another $2 billion will go towards the promotion of zero-emissions vehicles (specifically infrastructure, such as EV charging stations, etc.). That leaves a little over $10 billion for the customers.
VW will spread that money across three compensation options: Buybacks (VW buys the car at pre-Dieselgate prices), Lease Termination (end your lease for no fee), and Equipment Fix (VW fixes the emissions cheat for free, you keep the car). Each option also includes restitution in the form of a cash payment, the amount of which varies depending on the car and compensation option picked.
Come next April, it’s possible the compensation will be considered tax free, but it’ll most likely vary state to state.
Exact figures will become available after July 26 (assuming court approval), but in the meantime, you can find a table of estimated compensation here.
1) Buyback
Eligible Owners who choose the Buyback option will be compensated with the calculated vehicle value, plus additional cash restitution. The vehicle’s value is calculated using the clean trade-in price from the September 2015 edition of the National Auto Dealer Association (NADA) Used Car Guide, as adjusted for mileage and equipped options. In a nutshell, what the car was worth pre-Dieselgate.
The extra cash restitution is calculated to be 20 percent of the NADA vehicle value, plus $2,986.73, with a minimum total of $5,100, and a maximum total of $10,000. Note – this extra cash restitution is in addition to the pre-Dieselgate car value.
There are a few special cases included in the Buyback option. If the affected car in question was sold after September 18, 2015, but before June 28, 2016, the original owning party is considered an “Eligible Seller,” and can claim 50 percent of the extra cash restitution. Eligible Sellers must self-identify by September 16, 2016, assuming preliminary approval is granted later this month.
Additionally, Eligible Owners who purchased their car after September 18, 2015, will receive roughly half the restitution payment as an equivalent owner who purchased the car on or before September 18, 2015.
VW will provide the Buyback compensation within 90 days of Buyback offer acceptance.
And in case you’re wondering what VW will do with all those defective diesels, odds are all of them will end up as scrap.
2) Lease Termination
Eligible Lessees who choose this option will have their lease ended without incurring an early-termination penalty. They will also be provided a lessee restitution payment that’s roughly half that of an equivalent Buyback restitution offer (does not include the original vehicle value). For example – if an Eligible Owner receives $6,000 in cash restitution for a Passat Sedan, a lessee would receive $3,000 for that same Passat Sedan, just so long as both cars came with an equivalent equipment spec and model year.
VW will provide lessee restitution payments within 45 days of offer acceptance.
3) Equipment Fix
Eligible Owners and Lessees who want to keep their cars can elect to have the cheating emissions equipment fixed at no charge. This option also includes the same cash restitution as the Buyback option ($5,100 to $10,000). However, there’s an extra little wrinkle if you want to go with the fix.
As of this writing, we don’t know for certain whether or not a fix is even possible. VW submitted a proposal on what can be done to make the offending cars legal, but the plan has yet to be approved by regulators. Furthermore, if a fix is found, it’ll likely alter key vehicle features, including gas mileage, horsepower, and reliability.
VW has until May 1, 2018, to hammer out a solution. If a fix is found, customers electing this option will receive a notification outlining what the fix entails and how it’ll affect key vehicle features. If the customer doesn’t like the details of the fix, or no fix is found by May 1, 2018, the customer will still have the Buyback option. If a fix is found and accepted by the customer, VW will make the modifications and provide the cash restitution within 90 days.
The Claim Process
Should the judge give the okay, claims will be accepted starting July 26, 2016, and will conclude September 1, 2018. The settlement plan will begin a rollout this fall. Affected customers who choose to exclude themselves from the settlement will still be eligible for an equipment fix (assuming one is found), but will be ineligible for the Buyback option, Lease Termination option, and cash restitution.
Check back with TopSpeed as the story develops, and we’ll provide you with everything you need to know.