Volkswagen Paying $1.2 Billion To US Dealers But Is That Enough?

Oct. 02, 2016 2:00 PM ET by Jay Traugott / 8 Comments

And a US diesel future still remains uncertain.

Volkswagen hasn't had a good year, to say the least, but it's making every effort to move on, as evidenced by what we saw in Paris last week. In the meantime, however, it needs to make good by compensating its US dealership network. According to Automotive News, the German automaker juggernaut will, pending a judge's final approval, pay $1.21 billion to 652 US VW dealerships as part of its $16.5 billion overall settlement for Dieselgate. Each of those dealers will receive $1.85 million over the course of 18 months.

This settlement agreement will also see VW corporate buy back diesel vehicles dealers haven't been able to sell. Dealers will also be allowed to delay VW-required dealership building improvements for two years. Just as this almost final settlement was announced, the US Justice Department, Federal Trade Commission and lawyers representing 475,000 VW diesel owners, filed legal documents asking a judge to grant final approval for buy back offers. A hearing is set for later in the week for that matter. As for future VW diesel models in the US? Don't count on it. VW was already barred from selling diesels in the US for what remained of 2015 once the scandal broke last September.

2016 and 2017 will also be diesel free. More than likely, VW instead will begin rolling out plug-in hybrids and EVs in the very near future. VW has acknowledged that it's going to take another three or four years for it to fully recover its image. The first step to recovery is, of course, to make good with its dealership network and customers. Step one is happening now.

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Volkswagen Paying $1.2 Billion To US Dealers But Is That Enough?

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