Judge approves settlement deal for VW 3.0-liter V6 diesel engine scandal

German carmaker Volkswagen AG is now on the verge of closing the final chapters of its Dieselgate saga after Judge Charles R. Breyer of the United States District Court for the Northern District of California has granted final approval to a settlement agreement between the company and the US Department of Justice (DOJ) as well as regulatory agencies compensate customers affected by the group’s 3.0-liter TDI diesel engines linked to the Dieselgate emissions cheating scandal in 2015.

This agreement became necessary because of the so-called Dieselgate scandal, which is a scheme executed by VW to sell around 590,000 diesel-powered vehicles in the US – covering model years 2009 to 2016 -- by making it appear that these units were cleaner than they actually were. Regulators have found out that VW employed a defeat device that helps these vehicles cheat on emissions tests. The latest settlement agreement is more or less similar to the one relating to VW’s 2.0-liter TDI engines.

Parties in the agreement include Volkswagen AG, Volkswagen Group of America, US DOJ, the Environmental Protection Agency (EPA), the State of California, the California Air Resources Board (CARB) and the California Attorney General.

The settlement agreement covers around 80,000 VW, Audi and Porsche vehicles that are powered by the group’s 3.0-liter TDI V6 diesel engine. Under the 3.0-liter TDI settlement program, Volkswagen would pay up to $1.22 billion in benefits, if: all affected customers take part in the program; all eligible Generation 1 diesel vehicles are bought back; and Generation 2 diesel vehicles are fixed. Vehicles with Generation 1 of the 3.0-liter TDI V6 engine include the VW Touareg and Audi Q7 (MY 2009 to 2012).

A buy back or lease termination was proposed since these Gen 1 diesel models couldn’t be modified back to their EPA-certified emissions levels. Vehicles with Generation 2 of the 3.0-liter TDI V6 engine include the VW Toureg (MY 2013 to 2016), Audi Q7 (MY 2013 to 2015), Porsche Cayenne (MY 2013 to 2016), and Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5 (MY 2014 to 2016).

These Gen 2 diesel models will be fixed or modified to ensure that their emission levels are the same as those in their certifications. Vehicle owners opting for fixes will be compensated by an amount ranging from $7,000 to $16,000 if emissions remedies are timely approved by regulators like EPA and CARB. If the fixes fail, VW would buy back or terminate the lease of these Gen 2 diesel models, costing the German carmaker up to $4.04 billion.

Meanwhile, Breyer also granted final approval to the settlement agreement proposed by German auto supplier Robert Bosch GmbH. Bosch was tagged in the Dieselgate scandal since the car-parts maker supplied control software for these diesel engines.

Bosch was also accused of helping design the so-called "defeat device" software that allowed affected TDI diesel engines to cheat emissions tests. The Bosch agreement covers all vehicles powered by the group’s 2.0-liter TDI engine (MY 2009 to 2015) and its 3.0-liter TDI V6 powerplant (MY 2009 to 2016). Bosch is budgeting around $327.5 million to compensate the owners of affected vehicles: $163.3 million for owners of 2.0-liter TDI-powered VW Group vehicles and $113.3 million for customers driving 3.0-liter TDI V6-powered VW Group vehicles.