Just recently, to avoid costly lawsuits over its cheating diesel emissions tests Volkswagen has settled with the U.S. drivers and state authorities. The whole amount to pay by the German giant will most probably exceed 15 billion dollars. More than 10 billion will cover costs including buying back the cars and compensating their drivers, while the rest will be spent on environmental fines and investments in ‘clean-emissions’ technologies. The settlement awaits to be accepted by the San Francisco court.

Volkswagen is facing hard times after in September it admitted to use special software which allowed the vehicles to emit 40 times more pollution than allowed under the U.S. law. The whole scandal, dubbed ‘Dieselgate’, raised outrage throughout the automotive world. Despite the settlement the company may still face criminal charges and independent oversight. But closing the deal with the federal and state authorities so swiftly shows the effect of Volkswagen’s strategy and give it a chance to avoid the worst.

At the same time, Volkswagen has ruled out the possibility of such settlement in Europe, claiming that the legal regimes are too incomparable to allow for similar move, especially that the U.S. settlement is already a tough blow to VW’s finances. However, the European Commission demanded VW to compensate also European diesel owners to avoid discrimination. The dispute may be developed in the future.

The staggering sum of the U.S. settlement, however enormous, is not only a cost of cheating and corporate malpractice in general, but also of trying to make the company clean again as fast as possible. Who knows how much Volkswagen would pay if it engaged in multiple unending civil and criminal litigation, making its reputation even worse? Eventually it may be that in fact by one big chunk of money now the company did a really good deal.

About the Author

Back to list

Read also