Volkswagen in a San Francisco court yesterday reached a deal with regulators in the United States over its diesel emissions scandal that affects more than half a million customers locally and around 11 million worldwide.

The deal, only an “agreement in principle” currently, will be ironed out in coming weeks in meetings between the automaker and regulators that include the Department of Justice, Environment Protection Agency, California Air Resources Board and Federal Trade Commission.

Final settlement to include buybacks

Details are being kept confidential until a final settlement is reached. However, some things we know is that the settlement will resolve VW’s liability toward owners of the 482,000 2.0-liter 4-cylinder cars affected by the scandal, i.e. certain VW Jettas, Golfs, Passats and Beetles and Audi A3s. Owners will be able to choose from VW either buying back their car or repairing it.

It’s expected the buyback value will be a pre-scandal estimated value plus cash on top. Those on leases will be able to cancel their lease and also receive cash on top. The total cost of the settlement could be around $10 billion.

Note, the arrangements will have no legal bearing on proceedings outside of the U.S. and ongoing investigations by the Department of Justice, Criminal Division and the State Attorneys General are also unaffected. On top of this, VW still faces potentially hefty state and federal civil fines and penalties.

Resolution for V-6 models coming later

The judge presiding over the court hearing, Charles R. Breyer, said he expects any fines and resolutions with owners of the remaining 3.0-liter V-6 cars affected by the scandal, i.e. certain VW Touaregs, Porsche Cayennes and numerous Audis, will be addressed “expeditiously.”

Breyer has set a June 21 deadline for final resolutions to be submitted from all parties involved after which they will be disseminated in court.

Late last year we saw VW extend a Goodwill Program to U.S. owners that included a $500 gift card and a $500 credit at a VW dealer. The automaker also started rolling out fixes for cars in Europe where regulations for the specific NOx gas at the heart of the scandal aren’t as strict as in the U.S.

You can follow our coverage on the scandal at this link.


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