WASHINGTON -- A U.S. judge said he will decide by Oct. 25 whether to approve Volkswagen Group's $10.03 billion settlement with nearly 500,000 owners of diesel vehicles that don’t meet U.S. emissions laws, or if the plan should be modified.
At a U.S. District Court hearing in San Francisco on Tuesday, Judge Charles Breyer said the court is “strongly inclined” to approve the settlement, and allow VW to buy back the vehicles, but he said additional time was needed to consider issues raised by owners and others who objected to the plan.
Breyer’s approval would clear the way for VW to begin repurchasing as many as 475,000 2.0-liter diesel models with emissions software rigged to mask pollution in government lab tests. The settlement is a key milestone in VW’s ongoing efforts to move past the emissions violations.
Also during the nearly three-hour hearing, Breyer issued preliminary approval for VW’s $1.2 billion settlement with roughly 650 U.S. franchised dealerships.
“The parties believe that the proposed 2.0L TDI settlement program will provide a fair and reasonable resolution for affected Volkswagen and Audi customers in the United States and we welcome Judge Breyer’s positive comments during today’s hearing,” VW said in a statement. “We thank our customers for their continued patience as the approval process moves forward.”
As of Oct. 13, some 336,612 VW owners have registered to receive benefits under the settlement, said Elizabeth Cabraser, an attorney representing VW owners in the litigation.
Around 3,200 eligible owners have opted out of the settlement and around 460 objections to the deal have been filed in court.
Under the deal, owners stand to receive $5,100 to $10,000 in compensation, in addition to the value of their vehicle in September 2015, when the violations became public. Owners have until September 2018 to elect whether to accept the buyback offer or receive a repair of the emissions system.
However U.S. and California regulators have not yet approved a fix for the 2.0-liter vehicles, leaving a key component of the settlement up in the air.
If enough consumers select to have their vehicles fixed, VW would be able to pay less than the settlement’s agreed upon $10.03 maximum payout, but that can’t happen without approval from environmental regulators.
During the hearing, some VW owners argued that consumers should be reimbursed for the purchase price of their vehicles rather than the National Auto Dealers Association’s “clean” trade-in value as of Sept. 2015. Others said the settlement doesn’t explicitly reimburse owners for other costs such as dealer-installed options, F&I products and state registration fees.
Owners objecting to the deal represent less than 1 percent of those eligible to receive benefits from the settlement.