VW Reaches Partial Deal on V-6 Cheater Diesel Claims in U.S.

Volkswagen AG has agreed to pay a $225 million fine and fix or buy back 83,000 Audi, Porsche and VW vehicles in the U.S. that are equipped with 3.0-liter V-6 diesels rigged to cheat emission tests.

The partial settlement, filed in the U.S. District Court in San Francisco, resolves a complaint filed in January by the U.S. Environmental Protection Agency, Dept. of Justice and the state of California.

But the deal indicates that regulators still have not approved VW’s proposed repairs. Nor does the deal shield the same engines from other potential civil and criminal liabilities, including prior claims by the Federal Trade Commission.

The decree doesn’t mention direct compensation payments from VW to affected owners. But Judge Charles Breyer, whose announced Tuesday’s agreement, says the owners will receive “substantial” compensation. He will hold another hearing on Thursday about those payments.

Today’s deal orders that VW offer to buy back so-called “generation-one” vehicles—2009-2012 model Audi Q7 large crossover and VW Touareg midsize SUVs—because they can’t be brought into regulatory compliance. It adds that VW must offer owners of those vehicles free repairs to at least “substantially” reduce emissions if it can find an approved way to do so.

VW will be absolved from buying back “generation-two” diesels if it can bring them into full regulatory compliance using techniques not yet approved by regulators. This group comprises 2013-2015 Audi Q crossovers; 2013-2016 VW Touareg SUVs; 2013-2016 Porsche Cayenne SUVs; and 2014-2016 Audi A6 and A7 quattro sedans, A8 and A8L sedans and Q5 midsize crossovers.

The $225 million remediation fine will be used to fund projects intended to reduce nitrogen oxides (NOx) emissions. VW faces additional payments if it fails to reach an overall recall success rate of at least 85% for both generations of V-6 engines.

VW agreed last summer to pay $2.7 billion into the same program as remediation for excessive pollution from its 4-cylinder diesels.