It was reported on Thursday that Volkswagen has finally come to deal with US regulators, suggesting more than 600,000 affected cars in the US. Volkswagen AD ADR is included in the terms of the deal, which calls back affected cars, and forms compensation fund for owners. The company was reported to consent the agreement until the 21st of June.
500,000 diesel cars that were said to be manipulated over a sophisticated software, that wriggled around emission rules are set for a buy back under the deal. It appears that those vehicles are mostly the one with an engine of 2.0 liter, such as Golf, Jetta sedan, and Audi A3 brands, that were sold after 2009.
Subsequently, it was later found that about 80,000 diesel cars with bigger 3.0 liter exceeds the emission rules of the US, but is not considered part of the buy-back program. Thus, further details of the deal are anticipated today.
Die Welt, a German local newspaper reported on Wednesday, that Volkswagen has finally dealt with US regulators, to resolve its recent scandal on diesel-emission, and is obliged to pay $5,000 to every affected customers.
According to a source, the $5,000 proposal for every US victim must be presented to Charles Breyer, a judge in San Francisco today. In order to recover from the company’s recent scandal on emissions, US authorities asked the car maker to produce more electric vehicles.
It was founded by a lot of media publications that Volkswagen diesel cars emits about 40 times more nitrogen oxide pollutants, compared to industry emission standards. An illicit software or a “defeat device” was used by the car maker to reduce the nitrogen emissions in its diesel vehicles during an EPA testing, and they’ve used these for several years now.
Furthermore, the district judge ordered Volkswagen to present an alternative way to the scenario, but failed to submit last month and was given a new deadline on the 21st of April.
With a potential deal with US regulators, major investing limitations will be removed, as the automaker remained struggling in finding solutions to cut costs. Meanwhile, senior executives decided to forego hefty bonuses earlier this month for better improvement from bad publicity.
Over $2 billion savings were identified by the company in November, followed by decisions to trim down nearly 3,000 administrative staffs at its headquarters.
Many investment projects were turned down by Volkswagen, citing concerns about how to save costs. Thus, billions of dollars were lost since last September, after the scandal was revealed.
The payment of $5,000 on each of the 600,000 affected cars in the US is expected to yield by about $3 billion.
Apparently, shares of the company declined by 28% since last October. Analysts say, expenses on emission scandal solutions would trim down profits to 70%, which dragged down to 992 million euros.
Meanwhile, Volkswagen shares at the Frankfurt stock exchanged rallied today, fueled by negotiated deals with US authorities. US listed Volkswagen shares currently change hands at 3% at $28.66.
Volkswagen Shares Rallies
Shares of Volkswagen rallied over 6 percent amid Thursday’s session as concerns over the carmaker’s deal with the United States arises, appealing for a buy-back on 600,000 diesel cars in a step through providing solutions on the emission scandal.
Authorities and prosecutors worldwide are investigating the automaker after uncovering the installed software on cars used to cheat emission tests, revealing a scandal called Dieselgate in the media.
According to sources, the automaker aims for a buy back to a nearly 500,000 diesel cars across the United States. Volkswagen has admitted cheating on emission tests for about 11 million cars globally since 2009.