Volkswagen agrees to shell out $14.7bn to settle emissions-cheating scandal

 
Hayley Kirton
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The settlement was previously thought to be close to $10bn (Source: Getty)

Volkswagen has today agreed to pay out around $14.7bn (£11bn) to settle claims relating to the emissions-cheating scandal.

Last year, the car manufacturer admitted to fitting vehicles with devices designed to cheat emissions tests, prompting investigations and legal actions in a number of different countries.

Slightly over $10bn of Volkswagen's settlement relates to compensating vehicle owners, while $2bn will be directed towards a programme aimed at boosting emissions technology and $2.7bn will be put toward mitigating air pollution in the areas where the effected vehicles were being driven.

Just shy of half a million two litre cars, with model dates between 2009 and 2015, are affected by today's announcement. There could also be further payouts to come, as this settlement does not take account of three litre models or any criminal liabilities that could potentially become payable.

Although the total settlement is thought to cost Volkswagen $14.7bn, this figure will depend on how many consumers choose to have their car fixed and how many choose to have their car bought back by the company. At a press conference hosted by the US Department of Justice, it was said that consumers effectively have until May 2018 to make a choice about what course they will pursue.

Read more: VW set for face-off with investors in Germany at shareholders’ meeting

Earlier reports on the settlement suggested that the German company could be paying out around $10bn, with affected vehicle owners through to be eligible for compensation of up to $7,000. However, it was understood that this figure could change in between the time it was leaked and when the court documents were filed today.

"We take our commitment to make things right very seriously and believe these agreements are a significant step forward,” said Matthias Muller, chief executive of Volkswagen. "We appreciate the constructive engagement of all the parties, and are very grateful to our customers for their continued patience as the settlement approval process moves ahead."

Deputy attorney general Sally Yates said: "By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment. This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public's trust.

"And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go."

Shortly after the scandal broke, then-chief executive Martin Winterkorn stepped down from his role, and was replaced by former Porsche boss Muller.

Read more: VW's share price drops after profits and sales fall in first quarter

Speaking at the company's AGM last week, Muller said of the emissions scandal: "What's done cannot be undone. But what does lie in our power is ensuring we act in a responsible manner. This is our commitment to you."

Muller also announced that the company's recall plan had gathered pace lately, with regulatory approval having recently been given to recall 1m more vehicles, bring the total number of cars recalled by the manufacturer to over 3.7m.

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