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VW Settlement Leaves Much Unresolved


Today’s release of various settlement agreements between Volkswagen, consumers, EPA and the California Air Resources Board (CARB) and the FTC is a good start – but it is by no means the end of VW’s liability – it’s not even close.

Hundreds of car owners have filed individual lawsuits in various state courts, outside of the jurisdiction of Judge Breyer’s federal multi-district litigation, and thus outside of the scope of today’s settlement.

VW investors around the world who saw dramatic losses in the company’s stock price as a result of the fraud have not yet been compensated.

American based Volkswagen dealers have lost hundreds of millions in sales and suffered billions in other loses (customer goodwill, employee defections, and the massive cost of implementing the “fix”). The dealers’ woes are not addressed in today’s settlement.

Finally there are the still pending lawsuits filed by various local governments such as Hillsborough County, Florida (Tampa) and Harris County, Texas (Houston). Those and other similar cases could cost VW additional billions.

In short, today’s announcement is a good first step, but Volkswagen has much further to go before it is out of the woods. In fact, Richard Hilgert, an analyst at Morningstar Equity Research, estimates the total cost to the automaker will exceed $60 billion.

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