Volkswagen to Pay $14.7 Billion to Settle Diesel Claims in U.S.

Volkswagen has agreed to pay up to $14.7 billion to settle claims stemming from its diesel emissions cheating scandal, in what would be one of the largest consumer class-action settlements ever in the United States.

The proposed settlement involving the federal government and lawyers for the owners of about 475,000 Volkswagen vehicles, includes a maximum of $10.03 billion to buy back affected cars at their pre-scandal values, and additional cash compensation for the owners, according to two people briefed on the settlement’s terms.

The cash compensation offered to each car owner will range from $5,100 to $10,000. Both the buyback price and amount of the additional compensation will depend on the cars’ value before Volkswagen’s public admission last September that its supposed “clean diesel” cars had been deliberately designed to cheat on air-quality tests.

Despite the scope of the deal, which would still require the approval of the federal judge overseeing the case, the settlement would cover only a small fraction of the 11 million diesel cars worldwide — most of them in Europe — that Volkswagen has acknowledged contained the cheating software.

But in the United States, “It’s a remarkable deal for Volkswagen owners who were defrauded by the company,” said David M. Uhlmann, a former chief of the Justice Department’s Environmental Crimes Section who is now a law professor at the University of Michigan.

Rather than sell their vehicles back to Volkswagen, car owners in the United States can also choose to have their vehicles fixed to meet emissions standards, although doing so would probably reduce the engines’ performance and gas mileage. And the methods for fixing the vehicles that Volkswagen has proposed are still subject to approval by the Environmental Protection Agency, one of the federal parties to the case.

Volkswagen will also compensate previous owners who may have sold their diesel vehicles after the cheating became known last year — but at only half the rate of the compensation being offered to current car owners.

Particularly attractive is the combination of the buyback offer and cash payment, which appears to be the better option for consumers, Mr. Uhlmann said.

“It’s hard to see why consumers would want to take advantage of the fix and not the buyback option, unless they just love their cars,” he said. “For Volkswagen, it’s an extremely expensive settlement, far more than many analysts predicted.”

The settlement terms, first reported by Bloomberg News, are to be submitted on Tuesday to a federal judge in California.

Volkswagen would also pay $2.7 billion into an E.P.A. fund, the two people said, to compensate for the environmental impact of its cars, which were fitted with software that enabled them to pass emissions tests but exceed legal pollution limits in on-the-road driving. Volkswagen has also agreed to spend $2 billion on new cleaner-vehicle projects, an investment that the automaker could reap returns on.

All told, the civil settlement would be the largest yet by an automobile company, dwarfing the $1.4 billion that Toyota paid to settle a class-action lawsuit over flawed accelerators and the more than $2 billion General Motors has paid so far to settle claims from owners of cars with faulty ignition switches. Toyota, in addition, paid $1.2 billion to settle criminal charges, while G.M. paid $900 million.


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