FAQ: Volkswagen Diesel Emissions Settlement

For months, there's been speculation over how Volkswagen would resolve claims it had been skirting federal emissions requirements in its diesel vehicles via software that tricks polluting-testing equipment. The guessing ended June 28 when the company reached settlements of nearly $15 billion with owners of 2.0-liter TDI vehicles and several government agencies that had brought suit, including the U.S. Department of Justice and the Environmental Protection Agency.

The settlement includes more than $10 billion for vehicle buybacks, lease terminations and owner compensation. In addition, VW will pay $2.7 billion to support environmental programs to reduce polluting nitrogen oxides (NOx) in the atmosphere "by an amount equal to or greater than the combined NOx pollution" caused by VW's device-defeating cars, according to the settlement document. The company also must spend $2 billion to promote zero-emission vehicles "over and above any amount Volkswagen previously planned to spend on such technology."

The judge in the case gave preliminary approval to the settlement on July 26. A final approval hearing is set for Oct. 18, after which buybacks are expected to begin.

This FAQ presents some of the most important questions and answers that owners of VW and Audi vehicles may have about the settlement. It will be updated as more details become available. If you have a question that's not addressed here, let us know in the comments.

What's wrong with these cars?

A number of Volkswagen models that are equipped with the 2.0-liter diesel engine were programmed with software from the factory that allowed them to cheat on emissions tests. The car's emission control systems would appear to be fully functional while being tested, but on the road, the system would be disabled to improve performance. With the emission control system off, the vehicle emits higher levels of nitrogen oxide, up to 40 times above the legal limit.

What has Volkswagen offered as compensation?

In late June 2016, Volkswagen announced that it will either buy back or (if approved) repair cars affected by the recall. In both cases, the automaker will give owners an additional "restitution payment" to compensate owners for the diminished value of their vehicle.

Previously, Volkswagen offered a "Goodwill Package" to owners of 2.0L TDI vehicles affected by the emissions recall. It included a $500 Volkswagen Prepaid Visa Loyalty Card, a $500 Volkswagen Dealership Card and no-charge 24-hour Roadside Assistance for three years. That offer is no longer available.

Which cars are eligible for the buyback?

• 2010-2013, 2015 Audi A3 TDI
• 2013-2015 Volkswagen Beetle TDI
• 2013-2015 Volkswagen Beetle Convertible TDI
• 2010-2015 Volkswagen Golf TDI (2- and 4-door)
• 2015 Volkswagen Golf SportWagen TDI
• 2009-2015 Volkswagen Jetta TDI
• 2009-2014 Volkswagen Jetta SportWagen TDI
• 2012-2015 Volkswagen Passat TDI

How much can I expect?

According to court documents, the buyback value will be based on National Automobile Dealers Association (NADA) "clean" trade-in value of the car, adjusted for options and an annual mileage of 12,500, as of September 2015, before the emissions cheating scandal became public.

Because cars often change hands, perhaps more so as a result of this issue, the restitution payment will vary, based on the time frame and ownership scenario. The court documents break out into these categories:

Eligible Owner:

This means you are the registered owner of an affected vehicle and that you bought the car on or before September 18, 2015. If you decide to have Volkswagen buy back the car, you would get the buyback amount plus 20 percent of the vehicle's value and an additional $2,986.73. The minimum restitution you could get is $5,100.

If you purchased the vehicle after September 18, 2015 and decide to have Volkswagen buy back the car you would get the buyback amount plus 10 percent of the vehicle's value, an additional $1,493.37 and a proportional share of any restitution not claimed by the eligible seller. The minimum restitution you could get is $2,550.

Eligible Seller:

This means you were the registered owner of an eligible vehicle on September 18, 2015, who then transferred vehicle title between September 18, 2015 and June 28, 2016. You would only be eligible for the restitution payment at 10 percent of the vehicle's value, plus $1,493.37. The minimum you could get is $2,550.

I leased my Volkswagen. Am I still eligible for a settlement payment?

Yes. If you leased the vehicle with Volkswagen Credit, Inc., you are in the category called "Eligible Lessee."

Current Lessee:

If you are currently leasing an eligible model, you can terminate your lease with no penalty and receive a restitution payment of 10 percent of the vehicle value, plus $1,529.01.

Former Lessee:

If you leased an eligible model and turned it in on or after September 18, 2015, you can still receive a restitution payment of 10 percent of the vehicle value, plus $1,529.01.

If you had leased the vehicle and decided to buy it after June 28, 2016, you would be eligible to receive a restitution payment of 10 percent of the vehicle value, plus $1,529.01.

This is too much math. Can I look up the value online?

Yes. You can now get an estimate of your vehicle by visiting VWCourtSettlement.com and clicking on "Value My Vehicle."

I've added a ton of miles since September 2015. How will this affect the value?

As long as you've driven the car fewer than 12,500 miles per year, the compensation amount will remain the same. If you drive fewer than 1,000 miles per month, there's a chance that the payment might actually increase, based on NADA mileage tables.

I'm still making payments on this car, how will the compensation handle this?

Your payment will be based on the following scenarios:
• If your outstanding loan balance is less than the vehicle's value plus owner restitution, Volkswagen will pay off your loan and pay you the difference.
• If your outstanding loan balance is between 100 percent and 130 percent of the vehicle value plus owner restitution, Volkswagen will pay off your loan in full.

I'm done with this car. When can I get my money?

Volkswagen will begin accepting claims after July 26. The earliest possible time for payment to begin is October 2016. Eligible sellers (people who bought an affected vehicle and sold it prior to this settlement) must identify themselves by September 16, 2016.

Buybacks will be scheduled in the order in which they are received, taking into account the volume of paperwork. The whole process should be completed within about 90 days.

I love my TDI. I just want to get it fixed and keep driving it. How does this work?

At this writing (July 26, 2016), there is no formally approved fix. Volkswagen is working with the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) to get a solution approved. There's a lot of red tape regarding the submission, testing and approval processes for a fix of this magnitude. Owners may not know whether their cars have an approved emissions modification until as late as May 1, 2018. Once approved by the EPA and CARB, the emissions modifications will be available to all eligible vehicle owners and lessees free of charge.

Owners who get their cars fixed and keep them are still eligible for the restitution payment, based on the applicable owner scenario.

If no emissions modification is approved by May 1, 2018, owners will still have an opportunity to choose the buyback option.

I heard the fix will affect performance and fuel economy. Is this true?

It is too early to tell. Since the emissions modification has not been formally approved, there's no way to tell how it will impact fuel economy or performance.

Is the buyback offer a good deal?

That's up to you to decide. Short of suing VW yourself and winning (not a sure thing by any means), this offer will likely be the best one you'll get. Given the trouncing the TDI's image and value has suffered, it's unlikely that a private-party buyer or a used-car dealer will pay you more than the settlement is offering. Your only other realistic option is to keep the car.

If I choose to keep my TDI, what happens to its future value?

The reputation and value of these cars has taken a hit. This is why Volkswagen is compensating owners for the diminished value. It's too early to say if the value of diesels that remain in owners' hands will slip further. "There is still too much uncertainty to project how the remaining diesels will retain value," says Joe Spina, director of remarketing for Edmunds.

Spina attributes the uncertainty to the lack of information regarding the proposed fix and whether it will affect car performance. In other words, if you want to keep the car, do so because you like it, not because you're hoping it will be worth something in the future.

I'll need some time to think about this. How long do I have to decide?

The Class Action Settlement Program will accept claims until September 1, 2018.

Can I opt out and sue Volkswagen on my own?

Yes. The buyback is not mandatory, but you should factor in the time, effort and money involved in pursuing a suit on your own. When all is said and done, you might not get as much as this settlement offers.

I've decided to take the offer. Are there any loyalty deals if I stick with Volkswagen or Audi?

We anticipate there will be, although none have yet been announced. Stay tuned.

I really liked my last TDI. Can I buy a newer one that complies with the regulations?

It doesn't appear that way at the moment. Volkswagen's diesels have taken a huge public relations hit from this scandal, and consequently, the company has made no mention of any plans regarding its TDI cars. Furthermore, Volkswagen is expected to invest $2 billion over the next 10 years in zero-emissions vehicle technology, which includes battery-electric vehicles, fuel-cell vehicles, and plug-in hybrid vehicles.

If I keep my car, do I have to get the fix?

The repair doesn't appear to be mandatory at the moment. In the future, however, the EPA may require repair as a prerequisite to renewing your registration. Here's how this could shake out:

In the following states, diesel vehicles are explicitly exempt from emissions testing:

• Florida
• Georgia
• Pennsylvania
• Texas
• Washington (Diesels under 6,001 lbs. gross vehicle weight rating or model year 2007 and newer are exempt from testing)

A number of states do not have any vehicle emissions test programs. This means VW diesel owners who live there could conceivably keep driving the cars and not get a fix at all — unless the EPA could legally prevent unrepaired cars from being reregistered. If these cars are still on the road, of course, they would go on spewing NOx into the environment at up to 40 times above the legal limit. These states are:

• Alabama
• Alaska
• Arkansas
• Hawaii
• Iowa
• Kansas
• Kentucky
• Michigan
• Minnesota
• Mississippi
• Montana
• Nebraska
• North Dakota
• Oklahoma    
• South Carolina
• South Dakota
• West Virginia
• Wyoming

Will my car pass smog inspection if I don't get it fixed?

At the moment, yes. The cheat software is still active and the car will appear to be compliant when it is tested. Once a fix has been found, however, the owner may need to verify that the emissions modification was completed.

What will Volkswagen do with the cars it buys back?

Volkswagen cannot resell the affected vehicles until it has an approved emissions modification for them. If no fix is found, the cars must be "responsibly recycled," meaning they will be salvaged for parts.

Why aren't the 3.0-liter diesel models included in the buyback?

Negotiations are being conducted separately for the V6 TDI engines that also were found to have test-cheat software. On July 13, the California Air Resources Board (CARB) rejected a recall plan that Volkswagen presented for these cars. 

A VW spokeswoman told Edmunds that the company continues "to work closely with the U.S. Environmental Protection Agency and CARB to try to secure approval of a technical resolution for our 3.0L TDI vehicles as quickly as possible." The affected cars are:

2014-2016 Audi A6 Quattro
2014-2016 Audi A7 Quattro
2014-2016 Audi A8/A8L
2014-2016 Audi Q5
2009-2016 Audi Q7
2014-2016 Porsche Cayenne
2009-2016 Volkswagen Touareg