Canada's Condominium Magazine
Volkswagen drivers in the United States now know what they can expect to get in the way of compensation from the carmaker, which was prosecuted under the Clean Air Act for cheating on its diesel emissions claims. Volkswagen is required to repair or buy back every one of the approximately half-million diesel cars, mostly model years 2009–2015, that it sold in the US, at a cost of US $14.7 billion. Canada is not included in the settlement terms announced today in the US, but Volkswagen has said it hopes to provide remedies to Canadians “on pace with” US customers.
Car owners in the US will have the option of keeping their cars and having them fixed, or selling them back to Volkswagen at fair market value, according to the US Deputy Attorney General Sally Yates. That would be between US $12,500 and $44,000, says Car and Driver. Owners who keep their cars will receive between US $5,100 and $10,000 to compensate for diminished resale value.
The affected models include the Volkswagen Beetle and Beetle Convertible 2013–2015; the Golf 2-door 2010–2013; the Golf 4-door 2010–2015; the Golf SportWagen 2015; the Jetta 2009–2015; the Jetta SportWagen 2009–2014; the Passat 2012–2015; the Audi A3 2010–2013, 2015; the Audi A6 2014–2016; the Audi A7 2014–2016; the Audi A8/A8L 2014–2016; the Audi Q5 2014–2016; the Audi Q7 2009–2015; and the Porsche Cayenne Diesel 2013–2016.
In addition to the settlement announced in the US, Volkswagen is facing a multi-billion-dollar legal claim from investors who have lost money as a result of the scandal. The company’s share price fell 40 per cent at the time of the revelations last September, wiping tens of billions of euros from its market value. It has since recovered some of that loss, though sales have not recovered.
If there is a silver lining to the emissions cloud, it could be electricity. Volkswagen has said the crisis has “opened doors” and forced the company to “strengthen and speed up” changes that were overdue. Most notably, it will shift its focus onto electric and autonomous vehicles in the future, and away from diesel. The diesel car market is small, representing just 1 per cent of all new car sales in the US, with little likelihood of growing. The CEO of Volkswagen, Matthias Mueller, said the company would spend 10 billion euros (CDN $14.4 billion) by 2025 on new technologies and launch up to thirty new electric car models by that year. It forecasts that it will sell 3 million electric vehicles, or one-quarter of its total sales, by 2025.
The crisis, said Mueller, has “partially altered” the company’s perspective on its previous achievements, and its new strategy is to be a leading global provider of sustainable mobility. Just before the scandal broke, Volkswagen had surpassed Toyota as the world’s biggest car maker. Mueller apologised to shareholders for betraying their trust. The head of Volkswagen in the US, Michael Horn, was more blunt: “We’ve totally screwed up,” said Horn.
The full extent of the scandal is not yet known. How the so-called defeat software came to be installed in 11 million diesel cars so that they could pass emissions tests is the biggest question. There will likely be a complete overhaul of the company’s corporate governance, something investors in the company are already demanding. The former CEO of Volkswagen, Martin Winterkorn, who resigned just days after the scandal broke, is now under investigation over alleged market manipulation and for not revealing the emissions test fraud earlier. It isn’t yet clear how many others in the Volkswagen chain of command knew about the cheating, though there must have been many.
Investigations have also been opened in the UK, Italy, France, South Korea, Canada and Germany, with politicians, regulators and environmental groups questioning the legitimacy of VW’s emissions testing.