Yesterday a federal judge in San Francisco announced Volkswagen has reached an “agreement in principle” with regulators and consumer class action plaintiffs to address hundreds of thousands of diesel vehicles that were programmed to cheat on emissions tests. While full details of the agreement have not yet been released, yesterday’s court hearing finally provides some long-awaited details on what owners of VW’s noncompliant diesels can expect.

Here’s what VW owners need to know about the big announcement.



What Do We Know?

Judge Charles Breyer (brother of Justice Stephen Breyer of SCOTUS) said the agreement will provide “payment of substantial compensation” to Volkswagen consumers and resolve hundreds of consumer lawsuits that were filed. The agreement also would resolve a multibillion-dollar civil lawsuit against VW by the Justice Department and a lawsuit by the Federal Trade Commission over alleged deceptive marketing.

What Will My Options Be?

Breyer said the proposed agreement would give consumers several options to address their noncompliant diesels. Those options are:

  • Volkswagen will offer to buy backthe vehicles.
  • Volkswagen will offer to fix the vehicles, provided that it can get a technical solution approved by U.S. regulators. While a recall of VW diesels has begun in Europe, the automaker has struggled to gain regulatory approval in the U.S., which has stricter emissions limits. Since the emissions scandal was announced in September, Volkswagen has stressed that any required technical fix will be provided free of charge to consumers.
  • For those who have leased a VW diesel, there will be an option to cancel the remaining term on leases and return the vehicle to Volkswagen.

What Vehicles Are Covered?

The agreement in principle only covers two-liter diesel engine models sold under the Volkswagen and Audi brands. A resolution on three-liter diesels, such as the VW Touareg and Porsche Cayenne, has not yet been reached.

The diesel vehicle models covered by the agreement in principle are:

  • Volkswagen Jetta TDI (model years 2009-2015)
  • VW Jetta SportWagen TDI (model years 2009-2014)
  • VW Beetle TDI (model years 2012-2015)
  • VW Beetle Convertible TDI (model years 2012-2015)
  • Audi A3 TDI (model years 2010-2015)
  • VW Golf TDI (model years 2010-2015)
  • VW Gold SportWagen TDI (model year 2015)
  • VW Passat TDI (model years 2012-2015)

If I Own One of Those Cars, What Do I Need to Do?

Right now, nothing. While there is the framework of a deal between the class action plaintiffs and the Justice Department, the court has given the parties two months to hammer out the details.

What Don’t We Know?

There are still many aspects of this settlement that are unclear. Beyond the size of the civil penalty that Volkswagen will be required to pay and the issue of environmental remediation (i.e., how will VW offset the environmental damage caused by its noncompliant cars), of particular interest to consumers will be the following issues:

  • How will vehicles be valued for the purposes of a buy-back program?
  • If a technical fix is reached, will that fix degrade the vehicle’s fuel economy or engine performance?
  • Will owners who opt for that technical fix receive additional compensation from Volkswagen? If so, will that payment be in cash or in credit for use at VW dealerships?
  • How quickly will the buy-back program start?

When Will We Know More?

The court set a June 21 deadline for the federal government to file a proposed settlement and for the plaintiffs’ attorneys to file an approval motion for their settlement. Details in advance of that deadline may be scarce; after some anonymously sourced media reports in advance of yesterday’s hearing, Breyer issued a gag order until the settlements are entered.