Volkswagen (VLKAY) moved a step closer toward drawing a line under its emissions-rigging scandal Tuesday after a U.S. judge approved a $14.7 billion settlement with regulators and car owners.
U.S. District Court Judge Charles Breyer in San Francisco approved terms of the deal which will see VW buying back around 475,000 vehicles at a cost of $10 billion. A further $4.7 billion will go toward compensation for environmental damage and changes to VW's vehiclebuilding infrastructure. VW will start buying back the diesel-fueled cars in mid-November, according to terms of the settlement.
VW shares traded marginally higher in Frankfurt following the news, rising .64% to €126.65, but largely in concert with a strong session for German-listed equities. The benchmark DAX index touched its highest level so far this year after the closely watched Ifo sentiment survey indicated business confidence in Europe's largest economy hit a 2.5-year high in October.
However, VW still faces significant litigation risk in connection with the scandal, uncovered in September 2015, that affected hundreds of thousands of diesel-powered cars around the world.
In addition to the Tuesday settlement, VW will also need to meet potential fines from the U.S. Department of Justice and any damages awarded from one of the 16 separate proceedings brought by various U.S. states. Investors in the U.S. have also launched proceedings that could cost the world's biggest automaker a further €8.2 billion ($8.9 billion).