VW scandal settlement: Owners can choose a fix or a buyback

SAN FRANCISCO — Volkswagen has reached deal to repurchase or fix nearly 500,000 diesel cars that cheat on emission tests, giving car owners the choice of what to do.

No matter what they choose, owners will also receive "substantial" cash compensation for their trouble.

Federal Judge Charles Breyer ordered the automaker not to disclose how much money owners will receive while final terms of the deal are being hammered out, but there are widespread reports that the sum is $5,000.

The automaker, which admitted to cheating on emissions tests, said the preliminary agreement was reached in round-the-clock negotiations with U.S. environmental regulators, the Justice Department as well as attorneys for the car owners.

"VW is committed to winning back the trust of its customers, its dealers..and all Americans," VW attorney Robert Giuffra told the court. "We think good for the consumers, the environment, and good for Volkswagen."

Volkswagen so far has only given owners $500 in cash and $500 in store credits. It's also hired attorney Kenneth Feinberg to run a compensation fund for owners. But details of that compensation plan have yet to be decided.

But many owners ,and even members of Congress, have called on the automaker to buy back the cars from unhappy owners.

"Finally, Volkswagen appears to have a proposal to take care of customers who purchased its polluting diesel vehicles," said Michelle Krebs, senior analyst with AutoTrader. "It's a critical first step to move Volkswagen forward from this debacle."

Last fall regulators announced that VW's diesel cars had software that cheated on pass emission tests and let cars dump up to 40 times the allowed level of pollutants into the air. VW's CEO and head of its U.S. operations both quit as a result.

There are about 11 million of the cars worldwide.

VW faces massive fines that could exceed $18 billion for violating the U.S. Clean Air Act, as well as criminal probes and a suit by federal authorities charging it with deceptive advertising that touted "clean diesel" cars. VW is still negotiating with a number of government agencies as to how much money it will pay in fines.