Report: VW will Pay Dealers $1.2 Billion for Lost Franchise Value

In a statement today, Volkswagen said it will compensate dealers for the lost franchise value they may have suffered from the emissions cheating scandal. And while VW isn’t revealing how much it money it will cough up, a report from Reuters claims the amount is more than $1.2 billion.

Speaking with unnamed sources, Reuters reports that VW has agreed to pay around $1.2 billion to compensate its 650 U.S. dealers for the reduction in value of the VW brand dealerships. On top of that, VW will dole out certain incentive payments to dealers, as well as payments for vehicles that could not be sold.

Details regarding the distribution of the settlement money are still under discussion. A deal is expected to be finalized by the end of September.

Before the diesel scandal, VW offered diesel versions of six of its eight models sold in the U.S. TDI-branded vehicles accounted for more than 20 percent of its U.S. sales, but now dealers can’t sell these vehicles anymore. In the agreement, VW agreed to buy back unfixable, used diesel vehicles from dealers under the same terms such cars must be repurchased from consumers, according to Steve W. Berman, a lawyer for the VW dealers.

VW Group has agreed to buy back 475,000 2.0-liter diesels from consumers as part of a settlement plan. It is still sorting out a solution for 3.0-liter diesels with defeat devices.

“Our dealers are our partners and we value their ongoing loyalty and passion for the Volkswagen brand,” said VW North America chief Hinrich Woebcken 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.”

Source: Volkswagen, Reuters

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