Wednesday, October 26, 2016

VW Diesel Buy-Back Set

Volkswagen will buy back diesel cars sold in the U.S. The settlement has court approval and the buybacks will begin in a few weeks. The cost of the settlement is described as $14.7 billion, and most of that is the cost of buying back cars. The settlement also allows for modifications to bring cars into compliance with air pollution standards, though to date no such repairs exist. The actual costs to Volkswagen could be less because it is hard to predict how many cars it will have to buy back. On the other hand, the settlement covers only vehicles with a 2-liter diesel engine. The less common 3-liter engine will likely be covered in a subsequent action at additional expense. It is surely the end of Volkswagen’s U.S. diesel offerings. The company has neither the engineering designs nor the credibility to sell diesel engines to the U.S. market. It will continue to sell cars with gasoline engines. At the same time, it will speed up its efforts to offer zero-emission vehicles. It has few alternatives. The past failings on emissions limit its ability to sell fuel-burning engines but shouldn’t affect the credibility of future zero-emission designs.