Volkswagen Agrees to Pay Dealers for Diesel Damages

Another important milestone has been reached in the emissions scandal, as Volkswagen Group of America has announced that it has reached an agreement in principle to resolve claims with VW dealers in the US.

The deal amounts to a cash settlement (and additional benefits) to dealers to pay them back for claims of losses suffered after the emissions scandal broke.

“We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States,” says Hinrich J. Woebcken, CEO of the North American Region, Volkswagen in a statement. “This agreement, when finalized, will strengthen the foundation for our future together and further emphasize our commitment both to our partners and the U.S. market.”

Volkswagen’s relationship with its dealers was extremely fraught in the wake of the TDI scandal. Relations got even worse after Michael Horn, widely seen a champion for dealers, and VW severed ties.

When relations were at their worst, dealers feared that Volkswagen would leave the US altogether, leaving them holding the bag after spending lots of money updating their dealerships after promises of increased sales.

Since then, though, Volkswagen has reaffirmed its commitment to the market time after time and now, with this agreement, it looks like relations might be improving.

“Our clients recognized the best solution would be one that not only allows them to recoup lost franchise value and continue to employ thousands of American workers, but one that also charts a strong course for the recovery of the Volkswagen brand in the United States,” says Steve Berman, Managing Partner of the dealers’ council Hagens Berman. “Now that there is a path forward for dealers, they can continue to work proactively to take great care of their customers, who are also VW customers.”

The content of the deal is still confidential and this is only an agreement in principle, so nothing is final. A settlement isn’t likely to be finalized until late September and even after that, no action will be taken until a court approves it.