Time is up for Volkswagen to meet a federal judge’s deadline to detail how it will make nearly 600,000 diesel cars rigged to cheat on emissions tests comply with clean air laws.

Senior US District Judge Charles Breyer said he wanted to know the timing of the fix and any planned payments to vehicle owners by a court hearing set for today.

That is when a deal is expected to be announced between Volkswagen, the US government and private lawyers for the automaker to buy back some of the vehicles and spend just over USD 1 billion to compensate owners, a person briefed on the matter said.

The agreement would give some owners the choice of having Volkswagen repair their cars or buy them back, but it does not include plans on how to repair the vehicles, according to the person, who asked not to be identified because the deal hadn’t been made public.

Those plans, and the cost of the fixes, apparently are still under negotiation.

Compensation for car owners was among the details Breyer was seeking, but the judge was more focused on ending the ongoing pollution by getting the vehicles to comply with clean air laws.

He said last month that issue at the very least “must be resolved” and threatened a trial this summer if Volkswagen didn’t meet his deadline. It was unclear whether the deal would satisfy Breyer.

The “deal in principle” includes a maximum amount of spending, but the final details, such as how much each owner would get, are still being worked out, according to the person briefed on the matter.

With USD 1 billion to spend, it works out to about USD 1,700 per car. But some owners of newer models who get just a software fix may receive little. About 325,000 owners of older cars that require more extensive repairs likely will get more, because the repairs could affect mileage and performance.

Shares in Volkswagen were up 5.6 per cent in early trading in Europe on news of a deal with the government.

The owners and the US Department of Justice sued the company after it acknowledged in September that it intentionally defeated emissions tests and put dirty vehicles on the road.

Volkswagen told its shareholders last year it had set aside USD 7.3 billion to help defray the potential costs of a recall or regulatory penalties. Most outside observers have said that figure is likely far too low. The company faces as much as USD 20 billion in fines for Clean Air Act violations alone, before paying to fix the cars or compensate their owners.

comment COMMENT NOW