Dieselgate Update: Volkswagen Reveals Customer Compensation Plans

It has been seven long months for owners of Volkswagen’s “Clean Diesel” vehicles that were engineered to cheat emissions tests. Since the Dieselgate scandal exploded in September of last year, there have been rumors swirling of what consumers would be offered. This week, customers were given a half answer by the automaker, as VW made a status report to the United States District Court of the Northern District of California that laid out compensation plans but stopped short of disclosing exact dollar amounts.

The United States court system was tired of waiting to see what VW would decide to offer angry drivers, and in March Judge Charles R. Breyer set a deadline of April 21^st for the automaker to put forth definitive compensation plans. In true college student fashion, VW turned its plans in right at the deadline in a status conference yesterday with representatives from the automaker, as well as supplier Bosch (who provided VW with the system used to cheat testing), the Federal Trade Commission, and the Department of Justice.

I have good news and bad news for VW and Audi owners with these cheating engines. The good news is that plans have been decided on how to compensate owners of the more popular 2.0-liter diesel engine (about 480,000 vehicles). The bad news is that there still is no solution ready for the approximately 100,000 owners of Audi, VW, and Porsche vehicles equipped with the 3.0-liter V6 engines. For European customers, I have even more bad news, because VW has no plans (as of now) to compensate them.

So, what exactly can American owners of affected VW and Audi vehicles expect? The short answer to that question is money and options. Customers who bought or leased the cheating cars will be compensated, but at this time the exact dollar amount has not been agreed upon. Some news sources have been reporting that customers will each be given $5,000, but the official court documents (which can be obtained as a PDF here) state that several government agencies and the automaker are still negotiating what is best.

In addition to financial compensation, customers will be given options to escape their non-compliant vehicles. Customers with leases, the easiest to help, will be allowed to end their leases with no penalty. For the unlucky drivers who purchased their vehicle, they will be given two options. Once a fix (most likely a software update) is ready to bring the diesel engines back into EPA emissions compliance, VW owners will bring their cars in to be repaired (most likely through a recall). Owners who are satisfied with the correction will then keep their cars. For customers who are still unhappy, VW will offer to buy back their vehicle. At this time, it is unknown how much money VW would pay for each model.

While customers were waiting for a definite answer, VW launched a “TDI Goodwill Package” that included a $500 Volkswagen Dealership Card, $500 Volkswagen Prepaid Visa Loyalty Card, and free 24-hour Roadside Assistance for three years, but many owners stayed away from the offer because they were worried it would make them ineligible from any future compensation. As far as I can tell, the goodwill program will continue, and customers should be happy to know that it is clearly stated on the program’s page that “Affected customers eligible for the TDI Goodwill Package are not required to waive their rights or release or arbitrate their claims against Volkswagen Group of America in order to receive the Package.”

It will be interesting to see how many VW owners decide to keep their vehicles, and how many of them will sell them back. One of the big draws of these engines was their incredible fuel economy, but any fix from VW is sure to bring down those numbers. There’s also the issue of whether or not a customer will choose to remain with an automaker that so blatantly cheated EPA standards and then lied to its customers, touting how clean the engines were compared to traditional diesels. We might be surprised at how many customers elect to keep their cars, however. While General Motors has certainly taken a hit since its own ignition switch scandal, there are still many consumers who continue to only purchase GM vehicles in a show of extreme brand loyalty.

For its part, Volkswagen released only a small statement after its appearance in court. In its entirety, it reads, “Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the American public. These agreements in principle are an important step on the road to making things right. As noted today in court, customers in the United States do not need to take any action at this time.”

News Source: The New York Times