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Dieselgate

US judge greenlights initial $1.2bn VW consumer settlement deal for 3-liter engines

The deal offers financial, as well as buy-back and trade-in, compensation for owners of some 78,000 Volkswagens affected by the Dieselgate scandal. The German carmaker has now settled most of its US consumer claims.

German carmaker Volkswagen struck a landmark compensation deal Tuesday after a federal judge in San Francisco approved a preliminary $1.2 billion (1.13 billion euros) fix or buy-back plan.

The initial deal will see VW compensate the owners of around 78,000 3-liter diesel vehicles caught up in the company's emissions cheating scandal. The agreement will see the carmaker offer customers thousands of dollars in compensation on top of buybacks and repairs.

The deal also covers VW's other brands, Audi and Porsche.

Robert Giuffra, an attorney representing VW, said the settlement "marks an important milestone in Volkswagen's efforts to make things right in the United States."

However, if VW cannot fix the newer models to US regulators' satisfaction, then attorneys representing car owners will likely go back to court to seek buybacks. That could see the German car giant's latest compensation bill for 3-liter engines rise to over $4 billion (3.78 billion euros).

Tuesday's preliminary deal allows car owners to weigh in on the deal and find out whether their vehicle is eligible for compensation. U.S. District Judge Charles Breyer scheduled a final hearing on whether to grant final approval for the deal for May 11.

In a separate settlement, Breyer also granted preliminary approval for a deal that will see German auto supplier Robert Bosch GmbH pay $327.5 million (309.6 million euros) in compensation to VW owners.

Further legal battles await

The result of Tuesday's hearing means the carmaker has now settled most of its U.S. consumer claims, having already agreed to spend up to $10 billion to compensate owners of around 475,000 2-liter VW and Audi vehicles caught up in the scandal.

In January, the company also agreed to pay $4.3 billion to settle a US criminal investigation.

However, the German carmaker isn't by any means off the hook. It still faces claims from investors, suits from some U.S. states and pending investigations by the U.S. Securities and Exchange Commission, as well as German prosecutors.

U.S. prosecutors have also charged seven former and current VW executives with wrongdoing.

Volkswagen's next hearing is in Detroit next week, where it is set to plead guilty to three felony counts as part of its plea agreement with U.S. investigators.

dm/rs (AP, Reuters)

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