• by Thom Forbes  @tforbes, April 21, 2016

As part of a sweeping and costly settlement proposal, Volkswagen will later today tell a federal court in San Francisco that it will buy back nearly 500,000 diesel vehicles that gamed U.S. vehicle emission regulations, according to a Reuters story bearing all the usual qualifications about details being hammered out and a deal not being a deal until it is signed and sealed.

The buyback agreement reached in talks in Washington, D.C., with U.S. government officials including the Environmental Protection Agency and the Justice Dept. “would include versions of the Jetta sedan, the Golf compact and the Audi A3 sold since 2009,” David Shepardson reports. “The buyback offer does not apply to the bigger, 80,000 3.0-liter diesel vehicles also found to have exceeded U.S. pollution limits, including Audi and Porsche SUV models,” according to two sources. 

“VW will pay cash compensation to owners who either sell their vehicles back or get them fixed,” one of the insiders tells Shepardson, who writes that “owners selling back their vehicles will get an additional cash payment on top of receiving the estimated value of the vehicles from before the emissions scandal became public in September 2015.”

Today is the deadline set by U.S. District Judge Charles Breyer for VW to reveal its proposal for getting the effected vehicles off the roads — his main priority. A status conference is scheduled for 8 a.m. PDT. 

Due to the level of interest in “Re: Volkswagen ‘Clean Diesel’ Marketing, Sales Practices and Products Liability Litigation, MDL 2672,” the court has created a Web page “to notify journalists and interested members of the public” about developments. It includes downloadable PDFs of selected documents, and phone number reporters can call to listen in to today’s conference.

A source tells the Associated Press’ Sudhin Thanawala and Tom Krisher that the compensation deal will cost VW “just over $1 billion” but that “details, such as how much each owner would get, are still being worked out.”  

Bloomberg’s Christoph Rauwald, Alan Katz and Kartikay Mehrotra report that VW has “agreed to set aside at least $10 billion to resolve civil claims by the U.S. government and lawsuits by American car owners over diesel vehicles rigged to cheat pollution controls,” according to “a person with direct knowledge of the matter.” 

How much of that will be set aside for compensation and buyback is “unclear,” according to their reporting. “It also uncertain if the amount would resolve all of the U.S. civil claims against Volkswagen,” they write.

“Analyst Marc-Rene Tonn at Warburg Research estimated the direct financial impact on Volkswagen from the emissions scandal worldwide at €28.6 billion ($32.3 billion). The company also faces losses from declines in market share and having to lower its prices to keep customers,” the AP’s Thanawala and Krisher write.

“Even at a high price, a settlement would be a major relief to the car company,” observes the New York Times’ Jack Ewing. “The uncertainty over the financial impact of the deception has delayed its earnings reports and impaired its ability to raise money on the markets.”

Indeed, as news of a settlement leaked out, VW “led Germany’s blue chip DAX index Thursday up 5.8% to €127.80 ($145.00) around 0738 GMT, after closing more than 6% higher Wednesday,” William Wilkes reports for the Wall Street Journal.

“We welcome the fact that VW appears to be pursuing a broad compensation program, as it further de-risks the equity story, allowing the company to focus on running the business, and turning the VW brands’ uncompetitive cost ratios around,” analysts at Evercore ISI said, according to Wilkes.

“Last September, the company admitted to installing so-called defeat-device software on certain diesel-powered Audi, Jetta, Golf and Passat vehicles, allowing them to pollute more on the road than during government emissions tests,” William Boston and Sara Randazzo reminded us in a Wall Street Journal piece Wednesday.

“But sorting out what went wrong and when — which its directors are expected to learn Friday from an investigator’s report — has been stymied by conflicting versions of what took place.” They point out that “no evidence linking current or former top executives to the cheating has emerged.” But an internal memo reviewed by the WSJ “has fed speculation that Volkswagen tried to cover up the diesel fraud."

IOW, criminal charges may be in the offing, too.