Volkswagen Readies $1.2 billion Package To Compensate Its Dealers In The US

Aug 27, 2016 10:30 AM EDT | Sovan Mandal

Volkswagen's US division has said it is ready to compensate its dealers for losses incurred over the infamous dieselgate scandal. An agreement to this effect has already been drafted though the final terms are still being worked out.

The agreement will also need to be ratified by the U.S. District Court for the Northern District of California, Motor1 reported. It is only after the court's green signal that the terms of the deal will be announced. However, there still are a few contentious issues that remain. For instance, Volkswagen said it is still not sure how best to 'apportion payments to dealers in the appropriate manner.'

Till then, the automaker has assured its 650 dealers in the US of a financial compensation package that is pegged to cost the company no less than $1.2 billion. The amount is to be paid to the dealers to compensate for the dent in image the dealers suffered post the emissions scandal.

The package will also take care of the cars in the dealer's inventory that could not be sold after buyers became wary of them post the emissions scandal. Additional benefits too are being earmarked for the dealers as the automaker attempts to bury the ghosts of the scandal that has cost the car maker billions of dollars already.

"We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States," said Hinrich J. Woebcken, chief executive of VW's North American region.

As part of the agreement, Volkswagen will buy back from the dealers those 2.0-liter used diesel cars that cannot be or is not economically viable to be fixed. The cars would be bought back as per the same terms as in the consumer buy-back plans.

According to Reuters, Volkswagen also has to deal with the larger 3.0-liter diesel engines powering about 85,000 high-end cars that too feature the cheat mechanism. The automaker had earlier agreed to dole out $10.03 billion towards buying back 475,000 cars equipped with 2.0-liter diesel engines.

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