Volkswagen would repair or buy back polluting vehicles and pay each owner as much as $10,000 under a $14.7 billion deal the car maker has reached to settle lawsuits stemming from its emissions cheating scandal, a person briefed on the settlement talks said Monday.
The deal sets aside $10 billion to repair or buy back roughly 475,000 polluting Volkswagenvehicles with 2-liter diesel engines, and to compensate each owner with an additional payment of between $5,100 and $10,000, the person said. The person asked not to be identified because the deal will not be filed in court until Tuesday, and a judge has ordered attorneys not to talk about it before then.
Owners who pick the buybacks would get the clean trade-in value of their cars from before the scandal became public on Sept. 18, 2015. The average value of a VW diesel has dropped 19 percent since just before the scandal began. In August of 2015, the average was $13,196, and this May it was $10,674, according to Kelley Blue Book.
The settlement still requires a judge’s approval before it can go into effect.
The scandal erupted in September when it was learned that the German automaker had fitted many of its cars with software to fool emissions tests and had put dirty vehicles on the road. Investigators determined that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems in humans. Car owners and the U.S. Department of Justice sued.
The settlement also includes $2.7 billion for environmental mitigation and another $2 billion for research on zero-emissions technology, the person said.
The $14.7 billion would eclipse the cost of all recent automotive scandals. But VW is still facing billions of dollars in fines and penalties that are not part of the deal.