VW Readies Payments to U.S Dealers Hurt by Diesel Scandal

Volkswagen AG is telling its 650 U.S. dealers they will be compensated for economic damage they have sustained from the company’s diesel emission cheating scandal.

Mark McNabb, chief operating officer of VW’s Americas unit, told more than 150 dealers on Friday the company is in “heavy discussion” about restitution and will have a plan finalized within a month, one participating dealer tells The Wall Street Journal.

VW’s dealers in the U.S. have been sitting on an inventory of some 12,000 diesel-powered models since September. That’s when the Environmental Protection Agency declared the vehicles unsalable because their engines were rigged to evade emission standards for nitrogen oxides. EPA says the affected cars and crossovers emit as much as 40 times the allowable levels of NOx.

Dealers threatened in April to sue VW if it failed to compensate them. But they have avoided litigation to date. Diesels normally account for about 20% of VW’s sales in the U.S.

The company finally reached agreement with regulators last month on a $15.3 billion program to repair or buy back some 475,000 affected 2.0-liter, 4-cylinder diesels. But VW still hasn’t worked out a scheme to do the same with 85,000 Audi, Porsche and Volkswagen models equipped with rigged 3.0-liter V-6 diesels.