Several months ago Volkswagen offered a $1000 “good will” package to owners affected by the diesel emissions scandal.  Now, Volkswagen and the Justice Department have agreed in principle to settle an enormous civil lawsuit intended to hold Volkswagen accountable for selling diesel-powered vehicles equipped with illegal software that enabled the vehicles to evade emissions tests.  The settlement will cost Volkswagen as much as $14.7 billion and is by far the largest in the history of the automotive industry.  Affected owners will have the right to choose between selling their vehicles back to Volkswagen or having Volkswagen bring the vehicles into compliance with EPA emission standards. Affected owners will also receive cash compensation between $5,000 and $10,000, depending on how much their vehicles would have been worth had they complied with federal law.  If approved by the federal judge presiding over the Justice Department’s lawsuit, the settlement will cover about a half million vehicles sold in the United States.

Though a significant step toward putting the scandal behind Volkswagen, the settlement only covers vehicles sold in the United States, fewer than 5% of affected vehicles sold around the world.  The settlement will not affect investigations and claims by other parties in the United States and abroad, especially in Europe where most of the illegal vehicles were sold. Initial reactions to the settlement have been favorable, but however this scandal is ultimately resolved, it will have an enormous impact on the gigantic car company.  Given that the illegal software was discovered essentially by accident by researchers at the University of West Virginia, one wonders how many other fraudulent vehicles we might have on our roads today.