Business & Tech

Volkswagen, US near settlement on emissions case

DETROIT — German automaker Volkswagen confirmed Tuesday that the company is in advanced discussions with US officials to settle criminal and civil cases related to its far-reaching diesel emissions scandal.

The settlement, which has yet to be finalized, will require the company to plead guilty and pay $4.3 billion in fines. Volkswagen will also be required to have an independent monitor oversee its business for the next three years to ensure regulatory compliance.

In recent cases against scandal-stricken automakers, companies paid hefty government fines but did not admit criminal wrongdoing.


The late-stage deal with the Department of Justice and US Customs and Border Protection is still subject to the approval of Volkswagen’s management and board of directors, the company said. Those bodies could meet soon.

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If it receives their support, the settlement must then be approved in court.

The agreement comes three months after a US District judge signed off on a separate settlement that requires Volkswagen to pay regulators and car owners $14.7 billion, the largest penalty levied against an automaker in US history. Most of that money will be used to buy back cars and otherwise compensate impacted customers; smaller portions are allocated for efforts to mitigate the environmental damage and promote zero-emission cars.

‘‘When you break the laws designed to protect public health in this country, there are serious consequences,’’ Environmental Protection Agency Administrator Gina McCarthy said at a June 2016 news conference when the penalty was announced.

It was revealed in 2015 that Volkswagen outfitted its diesel cars with software that recognized when the vehicle’s emissions were being tested. The car then activated a mechanism to reduce its emissions at the expense of engine performance. When not being tested, however, the cars actually emitted 40 times more nitrogen oxide than Clean Air Act regulations permit.


The scandal impacted 11 million cars around the world, including roughly half a million in the United States.

A Volkswagen executive was arrested in Miami over the weekend and charged with conspiracy to defraud the government, The New York Times reported. Oliver Schmidt, a German resident who previously led the company’s environmental and engineering office in Michigan, did not enter a plea in court on Monday. The Justice Department asserts that Schmidt knew the software falsified emissions tests but kept that information hidden from regulators.

In September, another Volkswagen employee, engineer James Liang, plead guilty to defrauding US regulators and customers. Prosecutors contend that Liang was among the employees who created the deceptive software after realizing Volkswagen’s diesel engine could not meet stiffening environmental standards, Bloomberg News reported.

Despite its troubles, the company now stands a decent chance to pass Toyota for the title of world’s biggest carmaker for the year.

Booming business in China helped Volkswagen increase its sales to 10.31 million vehicles last year across all its brands, which include Audi, Porsche, and Skoda, the company said Tuesday.


That was an increase of 3.8 percent over 2015, when Volkswagen came in second to Toyota. And a strong finish to the year in December improves the company’s chances of moving from No. 2 to No. 1 in global sales.

The settlement would require the company pay $4.3 billion in fines. The company would also be required to have a monitor oversee it for three years.

Executives have since apologized for the emission scandal and pledged to expand their fleet of eco-conscious vehicles. In June, Volkswagen vowed to debut 30 new electric vehicles by 2025, an aggressive time frame during which the company also plans to invest in batteries, digitization and autonomous driving.

At the North American International Auto Show in Detroit, executives told reporters they were seeking to rebuild the country’s trust in the brand. The company unveiled a new version of the Tiguan and a modern, concept version of its classic microbus that is electric and self driving.

Volkswagen certainly isn’t the first automaker to run afoul of the federal government.

In 2015, the Department of Justice ordered GM to pay $900 million for an ignition switch defect that was tied to at least 174 deaths. The company and its executives faced no criminal charges despite accusations of misleading safety regulators and delaying potentially lifesaving decisions.

A year prior, Toyota was told to pay $1.2 billion for deceiving regulators about a glitch that caused some of its cars to accelerate suddenly. The defect also lead to fatal car wrecks and safety concerns among owners of the brand.