Volkswagen offers to buy back diesel cars as German bans loom

German carmaker Volkswagen Group said it would offer to buy back diesel vehicles if German cities ban them and also extended incentives for potential buyers of diesel cars to battle a slump in demand.

Cities in Germany can now ban the most polluting diesel vehicles from their streets after a court ruling in February. Many German cities exceed European Union limits on atmospheric nitrogen oxide, known to cause respiratory diseases.

At Volkswagen’s core VW brand, the carmaker said its buyback offer applied to new diesel vehicles bought between April 1st and the end of 2018 and kicks in if the city in which the buyer lives or works bans diesels within three years of the purchase.

It said its dealerships would buy back diesel vehicles affected by bans at their current value if their owners at the same time bought a new vehicle that is not impacted by cities’ driving restrictions.

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At Czech brand Skoda, the guarantee applies to cars bought between April 1st and end-June but applies if bans are put in place within four years of the purchase date. At Audi, the offer is for leased vehicles.

At the same time, Volkswagen said it was extending to the end of June incentives for customers trading in older diesel models for new ones.

The decision is unlikely to be extended to Irish sales until a ban is put in place here. A spokesman for Volkswagen Group Ireland said, "We are not aware of any proposal to ban diesel vehicles in Ireland in the foreseeable future, merely speculation that there might be such a ban from 2030. Accordingly, there is no correlation between this measure in Germany, to the Irish market."

Parking up in US

Meanwhile, in the US Volkswagen has paid more than $7.4 billion to buy back about 350,000 US diesel vehicles through mid-February, a recent court filing shows. The German automaker has been storing hundreds of thousands of vehicles around the United States for months.

Volkswagen has 37 secure storage facilities around the United States housing nearly 300,000 vehicles, the filing from the program’s independent administrator said.

The lots include a shuttered suburban Detroit football stadium, a former Minnesota paper mill and a sun-bleached desert graveyard near Victorville, California. VW spokeswoman Jeannine Ginivan said in a statement on Wednesday that the storage facility in Victorville, California, is one of many “to ensure the responsible storage of vehicles that are bought back under the terms of the Volkswagen” diesel settlements.

“These vehicles are being stored on an interim basis and routinely maintained in a manner to ensure their long-term operability and quality, so that they may be returned to commerce or exported once U.S. regulators approve appropriate emissions modifications,” she said.

In total, VW has agreed to spend more than $25 billion in the US for claims from owners, environmental regulators, states and dealers and offered to buy back about 500,000 polluting U.S. vehicles. The buy backs will continue through the end of 2019. The court fling said through December 31st Volkswagen had reacquired 335,000 diesel vehicles, resold 13,000 and destroyed about 28,000 vehicles.

As of the end of last year, VW was storing 294,000 vehicles around the country. VW must buy back or fix 85 percent of the vehicles involved by June 2019 or face higher payments for emissions. The company said in February it has repaired or fixed nearly 83 percent of covered vehicles and expects to soon hit the requirement.

Through mid-February VW has issued 437,273 letters offering nearly $8 billion in compensation and buybacks. In April 2017 Volkswagen was sentenced to three years probation after pleading guilty to three felony counts and paid $4.3 billion in federal penalties. The automaker in September 2015 admitted to circumventing the emissions control system in US diesel vehicles for vehicles sold since 2009, prompting the resignation of the company’s chief executive.

- Reuters