Volkswagen AG (OTC:VWAGY) has agreed to pay almost $1.6 billion to settle claims in a Canadian court alleging that VW made "false and misleading" environmental claims related to its diesel-engine emissions in marketing materials.
This latest settlement brings the total cost of VW's global diesel-emissions cheating scandal to over $18 billion -- and there's almost certainly more to come.
An agreement to buy back more diesels in Canada
The Canadian government's Competition Bureau, which is responsible for antitrust enforcement, announced on Monday that the Canadian units of Volkswagen's VW and Audi brands had agreed to settle a class action suit by offering to buy back and pay restitution to about 105,000 Canadian owners of vehicles with 2.0 liter diesel engines. VW's payments could total as much as 2.1 billion Canadian dollars ($1.57 billion).
As part of the settlement agreement, which is pending approval by the courts, VW also agreed to pay a fine of CA$15 million ($11.2 million) to the bureau.
VW's 2.0-liter TDI turbocharged diesel engine has been at the center of the emissions scandal. VW has admitted to selling millions of diesel-powered vehicles around the world that were programmed to give false results on government emissions tests. In regular driving, the cars emit pollutants at levels far above those allowed by law in many countries.
The vehicles covered by this settlement are VW and Audi models from the 2009 through 2015 model years equipped with the 2.0 liter TDI engine.
The Competition Bureau said that its investigation into models equipped with a 3.0 liter V6 version of VW's diesel engine is ongoing. VW is said to be close to a settlement in the United States related to those engines, which were fitted to certain VW, Audi, and Porsche models.
A billion here, a billion there, how much more can VW afford?
So far, Volkswagen has set aside about 18 billion euros ($18.8 billion) to cover the costs of the diesel-emissions cheating scandal. But much of that is already accounted for:
- In June, VW agreed to pay as much as $15.3 billion to buy back 2.0 liter cars in the U.S., to compensate owners, and to settle regulatory charges.
- VW agreed to pay another $1.2 billion in August to compensate its U.S. dealers.
- VW is expected to announce another settlement (related to the 85,000 3.0-liter models here) in the U.S. shortly.
- VW is also expected to be charged with crimes by the U.S. government, which is expected to demand a record payment to settle those charges ($3 billion, according to some reports).
And now, VW is on the hook for another $1.6 billion in Canada. For shareholders -- and investors eyeing VW's beaten-up shares -- the big questions remain: Where does this end, and will VW be able to afford it?
Fifteen months into the scandal, those are two of many questions that remain unanswered.