Completing the deal between Volkswagen and the Federal Trade Commission over the auto manufacturer’s deceptive claims for emissions standards, the agency announced the details of VW’s buyback program for its 3.0-liter TDI diesel vehicles.
The FTC filed suit against VW last year, alleging that the company’s advertising campaign in support of its “clean diesel” cars was false and deceptive in violation of Section 5 of the Federal Trade Commission Act. The automaker touted the vehicles as low-emission and environmentally friendly despite the presence of “defeat devices” to cheat emissions tests.
In July, VW reached a deal with the FTC (as well as the Department of Justice and the California Attorney General), agreeing to pay $14.7 billion in the largest false advertising settlement in the agency’s history. The partial agreement involved $10 billion in restitution for consumers, efforts VW would make to mitigate environmental harm, and a buyback and lease termination for the company’s 2.0-liter diesel vehicles.
Now the parties have announced another piece of the puzzle–the buyback program for 3.0-liter TDI diesel vehicles. Owners of model years 2009 to 2012 will be able to sell their car back to VW for between $26,000 and $58,000, depending on the model, mileage, and trim. If owners elect to keep their car, they can receive an emissions modification once it is approved by the Environmental Protection Agency and the California Air Resources Board, and will also receive monetary compensation, the Commission said.
VW is expected to obtain regulatory approval for an emissions repair that will bring vehicles into full compliance while not materially reducing the performance of the car, the agency explained. If that approval is received within a set time frame, the lessees and owners of model years 2013-2016 will receive both the emission modification and additional monetary compensation ranging from $8,500 to $17,600. “This means consumers with newer vehicles will receive the car they thought they purchased—plus a substantial additional payment,” the FTC said. If approval is not obtained for the modification, VW will be required to buy back or terminate the lease on those models.
For those owners who sold their TDI vehicles after the defeat device issue became public knowledge, compensation may be available, the agency added, and certain lessees are also eligible for compensation, depending on the make, model year, and availability of approved emissions modifications or repairs.
The buyback program will return more than a billion dollars to consumers, the FTC said, including a contribution from Bosch, the company that manufactured the defeat device. The total amount will depend on future events—for example, if no emissions repair is approved and VW must offer buybacks for the 3.0-liter TDI models, the company may end up paying up to $4 billion. If the modification does receive approval, the amount will likely end up in the $1.25 billion range, the agency predicted.
To read the stipulated orders and other court documents in In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, click here.
Why it matters: The combination of repairs, additional monetary compensation, and buybacks for certain models will “fully compensate” consumers who purchased 3.0-liter TDI diesel cars from VW, the FTC said. With the most recent order entered in California federal court, the agency completed its case against the auto manufacturer—the largest false advertising settlement in agency history.