VW to Pay U.S. Dealers $1.2 Billion as Dieselgate Compensation

By Paul Riegler on 25 August 2016
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In the wake of the Dieselgate scandal, many Volkswagen dealerships found that their franchises had little value beyond that of their real estate and their parts and new car inventory. Fahrvergnügen, it turned out, had little residual value.

On Thursday, Volkswagen Group of America agreed to compensate its 650 dealers for their losses to the tune of $1.2 billion in addition to the hundreds of millions of dollars it will pay to customers who purchased diesel-powered automobiles from the automaker.

‘‘They have cars on their lots they can’t sell,’’ said Steve W. Berman of the law firm Hagens Berman, who is representing the VW dealers in litigation, to the federal judge, Charles R. Breyer, who is overseeing the various cases against the automaker by state and federal governments, and VW owners in addition to the dealers. “Their franchise value has gone down. And they have invested millions in these Volkswagen franchises. So we are pleased that the settlement will address the financial harm that they’ve incurred.’’

Although the amount each dealer will receive will vary based on the size of the dealership, it averages about $1.85 million per dealer. The automaker still has to buy back unsold and unrepairable diesels from the dealerships in addition to this.

“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, VW’s CEO for the North American Region. “Our dealers are our partners and we value their ongoing loyalty and passion for the Volkswagen brand.”

The court must still approve the settlement once it is finalized.

(Photo: Accura Media Group)