VW Offering Diesel Owners Goodwill Gift Cards, Vouchers

German maker’s debt downgraded by two key ratings agencies.

by on Nov.09, 2015

VW owners won't lose their right to sue the company by accepting the goodwill offerings.

Owners of Volkswagen vehicles involved in a diesel cheating scandal are set to receive $1,000 in gift cars and vouchers, as well as free roadside service, as part of a goodwill gesture, the maker announced Monday.

The move affects owners of 482,000 vehicles equipped with VW’s 2.0-liter EA-189 diesel engines sold in the U.S. over a seven-year period. In September, the Environmental Protection Agency charged that the maker had used a so-called “defect device” to pass emissions tests, even though the vehicles produced far more pollution in real-world use, allegations the automaker subsequently confirmed.

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VW also revealed the suspect software was installed on a total of 11 million vehicles sold worldwide. And while the German maker plans to begin installing a fix as early as January, repairs could take significantly longer in the U.S. because VW has not come up with a solution accepted by the EPA.

“We are working tirelessly to develop an approved remedy for affected vehicles,” said Volkswagen Group of America CEO Michael Horn. “In the meantime we are providing this goodwill package as a first step towards regaining our customers’ trust.”

A similar program will be initiated by VW’s luxury subsidiary Audi later this week. The EA-189 engine has also been used in some versions of that maker’s A3 model.

(VW, Porsche and Audi order stop-sale of suspect diesels. Click Here for the story.)

VW is facing as much as an $18 billion fine for violating the Clean Air Act, and potentially serious penalties that could be levied as part of an ongoing investigation by the U.S. Justice Department. Separately, more than 300 lawsuits have been filed on behalf of owners of the affected VW diesels.

Audi will announce a similar move this week.

The automaker said there are “no stipulations” linked to the gift cards and vouchers. Owners will not be required to relinquish their rights to sue VW, nor will accepting the goodwill gesture limit their eligibility for further compensation in the future, according to a company spokesperson.

But the measure adds perhaps another $500 million to the cost of resolving the scandal. VW has already set aside about $7.3 billion to cover the problem, though various analysts have warned the eventual cost could be anywhere from five to 10 times more.

That doesn’t even account for any increases in the cost of servicing VW’s debt. On Monday, Fitch followed a move last week by Moody’s to downgrade the company’s rating. Fitch took VW’s debt down an unusual two notches, citing the “possibility of further problems still to be uncovered.”

(VW engineers admit to cheating. Click Here for that story.)

Complicating matters, the EPA has accused VW of cheating on emissions tests involving vehicles using a larger, 3.0-liter diesel. That includes products also sold by the Audi and Porsche brands. VW has denied that allegation but revealed that it has discovered “irregularities” involving another 800,000 vehicles.

A report in Germany’s Bild am Sonnstag newspaper, meanwhile, indicated that several VW engineers have acknowledged cheating on emissions test. The newspaper said that an internal investigation has found that they acted under a corporate culture of fear that would not tolerate them failing to meet aggressive emissions targets set by former VW CEO Martin Winterkorn, who resigned shortly after the scandal broke.

Analysts say the new gift cards and vouchers are unlikely to impact the legal tsunami rolling towards VW. Owners of the affected diesel products have already seen a sharp decline in the value of their vehicles, according to reports by the Black Book, and others tracking used car prices. VW earlier announced a $2,000 trade-in allowance for diesel owners looking to buy another one of the maker’s products.

(Investors flee as VW problems mount. Click Here for the latest.)

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3 Responses to “VW Offering Diesel Owners Goodwill Gift Cards, Vouchers”

  1. veh says:

    So…the company that defrauded me wants to placate me by letting me buy more of their goods and services. Not great, VW. You’re not going to make very many people happy with this

  2. GT101 says:

    Actually , no.

    The VW company who had a small number of engineers and programmers who wrote improper code for emissions controls on the VW EA189 series engines, is making a good faith, unconditional offer to all VW U.S. customers who have enjoyed better than EPA advertised mpg and engine performance since they purchased their VW four cylinder diesel powered vehicle. IMO that is an excellent first step to show VW owner’s that VW corporation is sincere in their efforts to resolve a minor technical emissions issue that caused no VW owner any issues what so ever. A simple software upgrade can make all VW four cylinder diesel engines emissions compliant. Additional hardware may also improve mpg and engine performance – all at zero cost to existing VW EA 189 diesel engine owners.

    In addition as VW has stated from the beginning of this scandal, the VW 3.0L V6 diesel engines do not contain any inappropriate code or a defeat device as the EPA has falsely claimed. Today VW posted notice that German authorities conducted an extensive investigation of the 3.0L VW diesel engines and found no violations of emissions regs.

    Some of mainstream media is starting to report the news from German authorities. The fact that the EPA is wrong in their claims on the VW/Audi/Porsche 3.0L V6 diesel engine containing a defeat device should be clearly and overtly reported by the media to reduce the damage to VW/Audi/Porsche and all owners of VW 3.0L V6 diesel powered vehicles.

    Now we’ll see if the incompetent talking heads at the EPA will admit that they are incompetent and didn’t understand a standard CAT cleaning cycle or if they will continue to try and persecute VW for the actions of a small group of rogue engineers and programmers. BTW, if these rogue employees can prove they were coerced into writing illegal code for the EA 189 series engines by management, then all in management responsible for the coercion should be held fully accountable under law.

  3. Fred says:

    The Legal Eagles have noted that when you go to the dealership (as you must) to sign for these, you should realize that Clause 11, on its face, requires you to submit any issues with VW to arbitration – in South Dakota[!!!] – in lieu of a lawsuit. VW says it only applies to the vouchers, not to the automobiles, but that’s not what it says. So, do we believe the good, honest folk at VW, or what’s down in black and white in the voucher agreement?