After Volkswagen’s emissions test scandal erased more than $56 billion in the company’s market value, the carmaker has recently announced that they have come to an agreement to pay $1.2 billion worth of compensation or buybacks to the owners of the vehicles affected by the diesel car scandal.
Back in November, the company has announced that they will pay not less than $15 million in the recall of almost 11 million vehicles composed of the diesel 2015 VW and Audi as a part of their settlement with regulators and their customers who were affected by the scandal. 8.5 million out of the total number of vehicles involved in the emissions test came from Europe.
Before the recall of the said vehicles, Volkswagen then announced that they have program and technology within the vehicles that allowed them to control or deactivate pollution control.
Due to the considerably huge dent in the reputation of the company caused by the scandal, Volkswagen CEO then Martin Winterkorn stepped down from his position as head of the company. Earlier this week, German prosecutors have named Winterkorn as one of the people who might have known about the cheated diesel emissions test. He is now under investigation of possible fraud.
Should the company fail to receive a permission to repair the affected vehicles, the company is facing around $4 billion additional worth of expenses in settlement of the case.
Volkswagen Tops Global Sales
The German car-maker has ras recently outraced Toyota as the global leading in automotive sales with more than 10 million vehicles delivered all over the world during 2016.
Volkswagen’s global sales in 2016 rose by 3.8% in 2016 compared to the previous year.
In the middle of the company’s financial struggles, more than 1,000 complaints were received by the company, shares of the company have recovered from trading at around 122.80 to around 146.15 during December on investor hope that the company will recover from the global scandal.
During early Wednesday trading, Volkswagen shares have inched higher by 1.56% to 146.55 from recently trading down for the past six consecutive sessions from 153.07 to yesterday’s session close of 145.45 from opening at 145.40.
Volkswagen received a final approval from U.S. District Judge Charles Breyer on Monday to settle their diesel emissions scandal by $1.21 billion. Lack of information and response from the company then led to uncertainty from the investors to whether the company will be able to settle the complaints.
Although there was not an immediate response or announcement from the company, Volkswagen’s North American chief executive announced earlier that he believes in an agreement would lead them one step closer to fixing the company’s reputation.
Bosch To Contribute With Compensation
Along with Volkswagen’s own payment to the buybacks and to pay for the repair of the affected vehicles, car parts maker Bosch will also be paying compensation to a number of Volkswagen’s US buyers and dealers. The car parts supplier is set to give around 303 million euros or $327.5 million.
Despite their willingness to compensate with the settlement, the German car parts maker did state that they did not take part in the scandal. The company will be contributing to the settlement’s most substantial part of the ‘criminal law proceedings pending in connection with Volkswagen and Porsche diesel vehicles sold in the US’ said Bosch in a statement.
The company is being accused of assisting Volkswagen in the cheating of the emissions test which allowed the carmaker access to deactivate pollution control.