Volkswagen will pay about $1.2 billion (€1.05bn) to reimburse US dealers for losses caused by the emissions-cheating scheme, a person familiar with the matter said.
VW will also buy back unfixable used vehicles under the same terms as those given to consumers, lawyers for the 652 dealerships said in a statement, without disclosing the value of the tentative settlement.
The German car maker said separately it agreed to make cash payments and provide additional benefits to dealers to resolve their claims.
The agreement, which raises the amount VW will pay to resolve US lawsuits to $16.5 billion, removes one obstacle for the company as it seeks to repair its tarnished reputation.
While the automaker has already settled with car owners and regulators in the US, VW still faces investor claims and possible criminal charges.
VW also doesn’t have an approved fix for the 562,000 rigged diesel vehicles still polluting US roads.
"The dealers are VW's front line in this matter, so getting them compensated is critical," Rebecca Lindland, a senior analyst for Kelley Blue Book, said in an emailed statement.
“Not only do they represent the company to the owners, they’re also impacted financially since they’re hamstrung on what products they can sell.”
Shares rise
The shares gained as much as 2 per cent and were up 1.4 per cent to €122.05 as of 9.39am in Frankfurt trading.
The stock has dropped 8.6 per cent this year, valuing the German automaker at €63.2 billion .
VW reached a $14.7 billion agreement in July with car owners and US and California regulators that calls for buying back or fixing 480,000 vehicles with 2-litre engines.
The company is also on the hook for $603 million it agreed to pay 44 states.
VW still faces more state government claims and investor suits in the US as well as legal claims in Germany and South Korea. Criminal penalties hang over the company in all three countries.
US district judge Charles Breyer, who last month gave preliminary approval to the carmaker’s settlement covering the 2-litre models, pressed VW in court on Thursday for a solution for vehicles with 3-litre engines.
Those include the Volkswagen Touareg, Porsche Cayenne and Audi Q5. Breyer ordered VW to file a plan for fixing the 3-litre engines, and proof that it works, to regulators by October 24th and report back to him on November 3rd.
– Bloomberg