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VW may buy back diesels, offer $5,000 to owners

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(Read caption) The VW sign of Germany's Volkswagen car company is displayed at the building of a company's retailer in Berlin.

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According to a report from Reuters, Volkswagen and United States officials have reached an agreement on the "Dieselgate" issue that has plagued the company for months.

The deal could involve buying back up to 500,000 diesel cars in the U.S. The official announcement is expected tomorrow, the day of the court deadline that has already been pushed back.

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A separate report from Germany's Die Welt newspaper also said U.S. owners would be offered $5,000 each.

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In September it came out that 482,000 of VW's 4-cylinder diesels were putting out up to 40 times the allowable amount of pollution. Later it was learned that some 85,000 VW, Audi, and Porsche V-6 diesels were also polluting.

It is not yet clear if an actual fix for the issue will be announced, though the buyback offer may mean a fix could be farther down the road.

The report by Die Welt also indicates that European owners could be compensated similarly to U.S. consumers, which could raise the total cost to the company considerably. VW has already set aside $7.6 billion to deal with the issue. This U.S. solution could eat up all of that. If every U.S. owner were to take the $5,000, the cost to VW would be more than $2.8 billion, and that doesn't include the cost of the buybacks or any fines the EPA may levy against VW.

Late last year, VW extended a “Goodwill Program” to U.S. consumers that included a $500 gift card and a $500 credit at a VW dealer.

Several questions still remain. What strategy will VW employ for determining the value of the diesel-powered cars? Does the buyback offer include V-6 models as well as fours? What must owners agree to in order to get the $5,000? Will a fix be announced? If there is, will it harm power and fuel economy? Will owners be able to keep their cars without fixing them?

We hope to get the answers to these questions soon. Stay tuned.