A deal, if completed, is expected to include fines from regulators and compensation to owners that could collectively cost Volkswagen billions of dollars. The three people spoke on the condition of anonymity, citing the continuing legal matter.
Even at a high price, a settlement would be a major relief to the car company. The uncertainty over the financial impact of the deception has delayed its earnings reports and impaired its ability to raise money on the markets...
On the regulatory side, Volkswagen faces a theoretical maximum penalty of $18 billion in the United States. While lawyers in the case predict the actual fine imposed on Volkswagen to be much less, it would still set a record for an automaker accused of clean-air violations...Any settlement would also include provisions to fix nearly 600,000 cars in the United States that are still on the road, seven months after Volkswagen admitted cheating on emissions tests. Additionally, it will most likely include financial incentives to ensure that owners bring the cars back to dealers to be repaired.
In some cases, Volkswagen will not be able to fix the cars and will have to buy them back from owners. Kelley Blue Book, a research firm, estimated the cost of buying back the cars in the United States at $7 billion.
Judge Breyer is overseeing all of the litigation in the United States, including claims filed by federal and state governments as well as Volkswagen owners. Separate suits by Volkswagen dealers and by dealers of competing brands, who say the cheating gave Volkswagen an unfair advantage in the market, would probably not be part of the initial settlement.
Of 11 million Volkswagen vehicles with illegal software, an overwhelming majority are in Europe. But Volkswagen’s legal troubles are focused in the United States, where limits on nitrogen oxides are more stringent and the penalties more severe.
In addition, United States law gives owners significant scope to seek redress in court. The American owners are seeking compensation for the declines in the resale value of their cars. The models with the cheating software include Volkswagen, as well as Audi and Porsche cars with 2-liter or 3-liter diesel engines from the model years 2008 to 2015.