Volkswagen AG (VOWG_p.DE) and U.S. officials have reached a
framework deal under which the automaker would offer to buy back almost 500,000
diesel cars that used sophisticated software to evade U.S. emission rules, two
people briefed on the matter said on Wednesday.
The German automaker is expected
to tell a federal judge in San Francisco Thursday that it has agreed to offer
to buy back up to 500,000 2.0-liter diesel vehicles sold in the United States
that exceeded legally allowable emission levels, the people said.
That would include versions of the
Jetta sedan, the Golf compact and the Audi A3 sold since 2009. The buyback
offer does not apply to the bigger, 80,000 3.0-liter diesel vehicles also found
to have exceeded U.S. pollution limits, including Audi and Porsche SUV models,
the people said.
U.S.-listed shares of Volkswagen
rose nearly 6 percent to $30.95 following the news.
VW in September admitted cheating
on emissions tests for 11 million vehicles worldwide since 2009, damaging the
automaker's global image.
As part of the settlement with
U.S. authorities including the Environmental Protection Agency, Volkswagen has
also agreed to a compensation fund for owners, a third person briefed on the
terms said.
The compensation fund is expected
to represent more than $1 billion on top of the cost of buying back the
vehicles, but it is not clear how much each owner might receive, the person
said.
Volkswagen may also offer to repair polluting diesel vehicles
if U.S. regulators approve the proposed fix, the sources said.
A VW spokeswoman, the EPA and the
Justice Department declined to comment Wednesday.
VW will pay cash compensation to
owners who either sell their vehicles back or get them fixed, one of the people
briefed on the matter said. Owners selling back their vehicles will get an
additional cash payment on top of receiving the estimated value of the vehicles
from before the emissions scandal became public in September 2015.
Owners are expected to have around
two years to decide whether to sell back vehicles or get them repaired. It is
not clear whether VW will be allowed to resell vehicles they buy back, the
source said.
The framework deal with U.S. officials was
reached after lengthy talks in recent days at the Washington law office of
Robert Mueller. The former FBI director is the court appointed mediator named
to help settle more than 500 civil suits filed against VW. The talks, which
continued over the week, included all the government agencies and lead
plaintiffs attorneys suing GM.
Some elements of the settlement are still
being worked out and details are not expected to be announced Thursday at a
court hearing, the people briefed on the matter said. The final deal could
still change before it is officially announced, they said.
U.S. District Judge Charles Breyer in
March gave VW until Thursday "to announce a concrete proposal for getting
the polluting vehicles off the road."
Breyer said in March the "proposal
may include a vehicle buy-back plan or a fix approved by the relevant
regulators that allows the cars to remain on the road with certain
modifications."
A final settlement is also expected to
include an environmental remediation fund to address excess pollution emitted
by the U.S. vehicles since 2009.
It is not clear if the deal will resolve
the U.S. Justice Department's civil suit filed in January against VW or if VW
will agree to pay a civil penalty. VW also faces ongoing criminal
investigations by the Justice Department and other prosecutors around the
world.
Separately, Germany's Die Welt newspaper
reported Wednesday that the deal to settle the case would involve it paying
each affected customer $5,000. But a person briefed on the matter told Reuters
that no decisions on how individual compensation will be awarded have been
made.
In December, VW said it was creating an
independent claims program for owners of vehicles with excess emissions.
It named compensation expert Ken Feinberg,
who administered funds for the Sept. 11, 2001 attacks, BP Plc Deepwater Horizon
oil spill and General Motors Co ignition switch crashes, to create and
administer the program.
(Reporting by David Shepardson;
Editing by David Gregorio and Andrew Hay)
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