Following a law suit filed by dealers in April, Volkswagen will now compensate 650 dealerships which will cost the company $1.2 Billion dollars.
Volkswagen as a brand was doing extremely well and was at pace to sell more than 8,00,000 cars a year thanks to their new plant in the state of Tennessee in the United States. Many franchises opened up as a result, all over the US with dealers having to shell out close to 2 to 3 million dollars. However, the sudden overturn caused by the diesel scandal and Volkswagen owing to recall these cars hit the dealers quite hard.
The brand image has taken a huge beating over the past year and sales have come down drastically for Volkswagen. A few days earlier, company representatives have assured to compensate 650 of its dealership network in the US a tune of over $1.2 Billion dollars. The company has also agreed with the dealerships to repurchase used diesel cars which have been purchased from consumers thereby further affecting the operating profits of the company.
Hinrich J. Woebcken, chief executive of Volkswagen’s North American operations said, “We believe this agreement in principle with VW dealers is a very important step in our commitment to making things right for all our stakeholders in the United States.”
Volkswagen lawyers told the federal judge that the company is still on the verge of fixing issues related to 80,000 units of Volkswagen, Audi and Porsche models which sport the 3.0-litre diesel engine that had the faulty emission systems.
Earlier this year, lawyers came to a settlement that Volkswagen will buy back approximately 500,000 cars equipped with the 2.0 liter engine which is seen in the VW Jetta and Passat. VW agreed to buy back the cars at a value quoted before the scandal. This could cost the company over $10 Billion dollars.