VW Promises To Pay Back Dealerships Over Emission Scandal

REUTERS/Marcelo del Pozo

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Chris White Tech Reporter

Volkswagen pledged to compensate franchise dealerships affected by the automaker’s diesel emission scandal, dealers announced Friday after meeting with company officials.

Volkswagen executives made the promise during a three-hour meeting with 150 dealers from the Northeast region at the Renaissance Hotel in Newark, N.J. The talks mark the first time VW has publicly promised its franchise dealerships full compensation for the 475,000 vehicles tainted with cheat devices.

The deal comes in response to VW’s admission in September to installing so-called defeat devices in hundreds of thousands of diesel-powered vehicles in the U.S.

Executives at the meeting discussed how the German automaker plans to implement the $15 billion settlement, which represents the largest automotive settlement in history. The company also explained that owners will be able to sell back or fix the problematic vehicles starting in October once the settlement is approved.

Regardless of the customer’s decision, they will receive a payment of $5,100 to $10,000, the source told reporters, asking not to be identified until the plan is publicly approved Tuesday.

The settlement, according to the source, also includes $2.7 billion for environmental mitigation and another $2 billion for research for renewable technology.

Dealers were not pleased with the company’s lack of specifics on the compensation details.

Steve Kalafer, the co-owner of a Volkswagen franchise in New Jersey, voiced frustration over the company’s decision to withhold its compensation plans. But Mark McNabb, a senior executive from Volkswagen Group of America Inc., reassured Kalafer and the other dealers that the restitution package is being hashed out internally and will be disclosed later in July.

“McNabb said the company was working toward a fair settlement and restitution for the dealers. He used the word restitution for the dealers for the first time,” Kalafer told reporters after the meeting.

Volkswagen tried to reassure the dealers that it is doing everything in its power “to make things right,” Jeannine Ginivan, a Volkswagen spokeswoman, said in an emailed statement to the Wall Street Journal.

Despite the reassurances, Kalafer told reporters he is concerned the company won’t follow through on its promise.

“Volkswagen’s compensation for consumers is very generous, but it was done with a gun to their head,” he told reporters. “We want to know what restitution Volkswagen is going to give to dealers, because we have not put a gun to their head.”

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